One of the more counterintuitive ideas I have come across in investing is this. Doing less can often lead to better results.
It does not sound right at first. We are conditioned to think that more effort leads to better outcomes. More research, more trades, more activity.
But when it comes to investing, I believe the opposite is often true.
The temptation to act
Markets are constantly moving. Prices go up, prices go down, and there is never a shortage of headlines telling you why. It creates a natural urge to do something. Buy this. Sell that. Adjust your portfolio.
I have felt that myself.
But over time, I have started to question whether all that activity actually improves returns. In many cases, I think it can do the opposite.
Trading frequently increases the risk of making emotional decisions. It can also lead to higher costs and taxes, which quietly eat into long-term performance.
Letting quality businesses do the work
When I think about the investments I feel most comfortable holding, they tend to be high-quality businesses with clear growth drivers.
Companies like CSL Ltd (ASX: CSL), ResMed Inc (ASX: RMD), or WiseTech Global Ltd (ASX: WTC) are not built to deliver their full value in a year or two.
In my view, they need time. Time to expand into new markets. Time to invest in innovation. Time to grow earnings and, ideally, reward shareholders along the way.
If I am constantly buying and selling, I am effectively interrupting that process.
The hidden power of inaction
What I find interesting is that some of the best investment outcomes tend to come from long holding periods.
Not because the investor made perfect decisions along the way, but because they avoided unnecessary ones.
By staying invested, you allow compounding to take hold. Returns generate returns, and over time that can lead to meaningful wealth creation.
It also removes a lot of the stress that comes with trying to time the market. Instead of worrying about short-term movements, the focus shifts to whether the underlying business is still on track.
When doing nothing is not the right move
Of course, I do not think doing nothing is always the answer.
If the fundamentals of a business change, or if the original investment thesis no longer holds, then it can make sense to reassess.
The key distinction, in my opinion, is between thoughtful decisions and reactive ones. Acting based on long-term reasoning is very different from reacting to short-term noise.
Building a portfolio you can stick with
I think this is where the idea of doing less really becomes practical. If I build a portfolio of businesses or ETFs that I genuinely believe in, it becomes much easier to stay the course.
That might include a mix of high-quality individual shares and broad market ETFs that provide diversification.
The goal, at least for me, is to reach a point where I am not constantly questioning every market move.
Instead, I can let the investments do their job.
Foolish Takeaway
Investing does not have to be complicated to be effective. In fact, I believe some of the best outcomes can come from a simple approach. Buy quality assets, hold them for the long term, and avoid the temptation to overreact.
Doing less does not mean not caring. It means focusing on what actually matters. And over time, I think that can make all the difference.
The post Why I think doing less could make you a better ASX investor appeared first on The Motley Fool Australia.
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Motley Fool contributor Grace Alvino has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, ResMed, and WiseTech Global. The Motley Fool Australia has positions in and has recommended ResMed and WiseTech Global. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.