Combating Constant Second-Guessing

Dave is also looking to retire no later than 45, but unlike Tim has no kids and doesn’t want any. Dave is from Ontario and is working towards his CGA certification.

I have a hard time pulling the trigger when it comes to major purchases. I drove my wife nuts a few years ago when we were shopping around for a used car because it took me weeks of reviewing prices, makes, and models before spending the $10,000 the 2008 Nissan Versa eventually ended up costing us (going on 4 years and around 60,000 kilometers).

Most times, I think it’s more I’m worried about buyer’s remorse than I am about the actual purchase and dollars out of the bank. With our car purchase, what finally swayed my decision was we found the model of Versa we wanted at about the cheapest price we could find over the weeks of reviewing different cars of that size. I was basically ensuring that I would not feel ripped off a few weeks or months later.

Sometime in the next month or so, I’ll be starting the “Investment Phase” of my retirement plan. I’m hoping to accumulate enough capital over the next decade or so to retire at or around age 45. For me, one of the major traits I’m going to have to overcome is the feeling of buyer’s remorse after making a stock purchase. It is more than probable that I will make some terrible stock purchases over my investing “career”. I’m hoping that some of these terrible purchases will be balanced by stocks that follow whatever hypothesis I have when I decide to buy.

As with all major purchases, I’ll be discussing it at length with my wife (whether she wants to hear it or not). So far, she hasn’t shown any real interest in much of our financial journey, beyond asking “are we done yet?” I will essentially be teaching my wife what I’m doing while I go, whether she wants to learn or not (I read her this paragraph and she rolled her eyes at me). I hope that we will both learn a lot in this process. I find this kind of new stuff really interesting, and although I’m doubtful it will happen, hope she will gain some level of enthusiasm for it as well.

To a certain point, cautiousness while investing will hopefully help me avoid most large errors I could make that would stop my wife and I from achieving our financial goals, but I need to have some level of confidence in the investment decisions.

How do you overcome second-guessing in your investing? How do you stop the hesitation before pushing the “buy” or “sell” button?

6 thoughts on “Combating Constant Second-Guessing”

  1. There is no need to guess once you read up on index investing. You cannot out-perform the market, with very minor exceptions that are a fraction of the people working on wall street (which gets very close to the illegal side of things). Plenty of studies out there on that, but would recommend you read up on John C. Bogle. If you want a Canadian version of index investing, visit Canadian Couch Potato’s website.

  2. Index investing: you might want to consider asset allocation (e.g. 70% equities, 25% bonds, 5% speculative or active investing) and also geo-political allocation (China, Russia, US, Europe, Japan, Canada).

    Also not all index funds are *cheap*.BMO has some Series D index funds and TD has some pricier ones, and there are the ETF’s traded on the exchanges – let us know what you decide.

  3. I’m with these guys. Stock picking is for full-time pros (and even most of them get it wrong) and suckas. Index investing is the way to go. I also recommend the model portfolios of Canadian Couch Potato. The author of that site is just about the smartest person on the whole web.

  4. Dave, you can pick stocks pretty easy. About 2 years ago I built a sizeable portfolio, mostly stock except for the REIT, that has generated over 22% growth on principal and I also get about 4.3% in dividends per year on top of the principal appreciation. I mostly avoid ETFs but studied a lot of ETFs as a way to build my portfolio. The portfolio is in do not touch mode. I funnel some of the dividends into a bond fund or use the cash to buy positions for my kids’ trust funds. I also use savings to top up on existing positions when there is a dip. I built the portfolio by looking at all the “dividend aristocrats” across various sectors and then chose two or three from each sector with low P/E ratios. I have just under 40 positions in the portfolio and then I have the bond fund and do flow through funds as an additional way to reduce taxes as my RRSP and TFSA get maxed out every year. See if Tim can extract my email address and feel free to contact me.

  5. I really like that you force your wife to listen to you talk about where the money is going and so on. Good on you!

    So many husbands don’t do that, and perhaps rightly so because wives say things like: Are we done yet?… but if anything (knock on wood) happens to you, it will be a GOOD thing that she knows where the money is going / has gone and why rather than being totally clueless and left in the dark.

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