Focusing On The Process Matters More Than The Returns In Investing

Kathy

Back in 2024, the team at The Joyful Investors was grateful to achieve a respectable portfolio return of 27.3%, slightly outperforming the S&P 500’s 23.3%. Many of our students also shared their personal successes with us, and it’s heartening to see their hard work and dedication pay off. However, as coaches and mentees within The Joyful Investors, we never set percentage-based return goals.

As investors, it’s tempting to set bold return targets for the New Year, especially after a string of strong results the last couple of years. It’s natural to feel excited and ambitious about what lies ahead. But here’s a critical truth: anchoring your investment strategy to a specific return figure can be a risky approach. Goals like these often shift the focus toward short-term gains and away from sustainable, long-term growth.

This topic has come up twice in our recent in-person workshops as we kick off 2025. They have asked, “How should we approach goal setting when striving for financial independence?” It’s a valid question, and one that underscores the importance of setting meaningful, actionable goals that go beyond chasing arbitrary numbers.

Rather than targeting a specific percentage, we believe in focusing on the process and on the factors you can control—such as consistently improving your skills, building a resilient portfolio, and adhering to sound investment principles. By concentrating on these aspects, you set yourself up for success, not just in a single year, but over a lifetime of investing.

This reminds us of soccer. A team doesn’t step onto the field aiming to score a specific number of goals. Instead, the focus is on playing the game efficiently—reading the opponent’s moves, balancing between attack and defense, and capitalizing on opportunities as they arise. Success isn’t about a fixed number but about playing a smart, disciplined game.

The Pitfalls of Percentage Goals

When you’re fixated on achieving a certain return, say 20% annually, it can cloud your judgment and lead to impulsive decisions. You might find yourself chasing overpriced stocks out of fear of missing out (FOMO) or settling for lower-quality investments simply because they seem to present lots of upside potential. These decisions, often driven by emotion rather than strategy, rarely end well.

The Power of Patience

Many retail investors fall into the trap of buying at high prices, driven by optimism and the fear of missing out. This is a mistake. As investors, we must resist this temptation and look for better risk-adjusted returns. The best opportunities often arise during periods of market fear and panic—when prices drop significantly, creating attractive buying opportunities. Patience, though challenging, is essential.

We believe the market will eventually present opportunities again, especially with increased volatility expected as Donald Trump takes office. When those opportunities arise, that’s when we should act decisively.

Shift Your Focus to the Process

Rather than chasing specific return percentages, retail investors should focus on refining your investment process. Our personal goal is not to achieve a predefined return but to adhere to a robust, repeatable investment strategy. This involves:

Identifying high-quality businesses that meet our fundamental analysis criteria.
Waiting for these businesses to reach technical support levels before buying.
Ensuring every investment decision aligns with our established rules and principles as per our Moneyball Investing Methodology.

By committing to this process, the returns will take care of themselves. Consistent performance over the long term is the natural outcome of disciplined investing.

Conclusion

As we carry on into a new year, remember to shift the focus from the returns to the process. The market will always have its ups and downs, but a sound investment process is your anchor. Stick to your principles, exercise patience, and let your decisions be guided by strategy rather than emotion.

Rather than obsessing over hitting a particular return, focus on reading the “game” of the markets, staying disciplined, and making strategic decisions. By doing so, you’ll build a resilient portfolio capable of adapting to changing conditions and achieving consistent, long-term success.

P.S. If you’re seeking greater clarity in your investing process and want to learn a tried-and-tested framework that our financial coaches at The Joyful Investors personally use to achieve financial independence, we invite you to join us at one of our upcoming workshops.

About Kathy

Co-Founder of The Joyful Investors and Co-CIO of InvestingNote Portfolio. I graduated with a degree in Economics in National University of Singapore (NUS). My previous experience with traders at the Merrill Lynch enable me to realize many counter-intuitive truths about how the financial markets work and to uncover the challenges faced by many new investors. Investing can be astoundingly simple, and my goal is to make financial education accessible and easy to understand for everyone.

Important Information

This document is for information only and does not constitute an offer or solicitation nor be construed as a recommendation to buy or sell any of the investments mentioned. Neither The Joyful Investors Pte. Ltd. (“The Joyful Investors”) nor any of its officers or employees accepts any liability whatsoever for any loss arising from any use of this publication or its contents. The views expressed are solely the opinions of the author as of the date of this document and are subject to change based on market and other conditions.

The information provided regarding any individual securities is not intended to be used to form any basis upon which an investment decision is to be made. The information contained in this document, including any data, projections and underlying assumptions are based upon certain assumptions and analysis of information available as at the date of this document and reflects prevailing conditions, all of which are accordingly subject to change at any time without notice and The Joyful Investors is under no obligation to notify you of any of these changes.