Less Is More: Why Simplicity Works in Investing

Quick note before we start: this article shares general ideas about simplifying your investment strategy. It's not personal financial advice.

For a long time, I thought becoming a better investor meant learning more. More ETFs. More factors. More diversification. More research. More precise allocations. And, of course, finding the next fund that could make my portfolio just a little bit better.

At some point, I realized I was spending a lot of time trying to optimize something that was already working. That realization changed how I think about investing — and it started with one question:

What if the best investment strategy isn’t the one that is theoretically perfect, but the one that is simple enough to follow for decades?

Key takeaways

A simple portfolio isn’t a lazy one — simplicity should come after you’ve made the important decisions (goals, risk tolerance, allocation).
There will always be a “better” ETF out there. Chasing it has a real cost: your time.
Your savings rate usually matters more to your outcome than your fund selection.
Fewer investment decisions mean fewer chances to sabotage a perfectly good plan.
Most actively managed funds underperform their benchmark — simplicity isn’t just easier, it’s often effective.

Why more choices doesn’t mean better investing

Investing can quietly become a hobby

There is always another ETF to research, another strategy to compare, another allocation to backtest. You can spend hours comparing:

Question	Example
Which ETF?	VEQT vs. XEQT vs. another global equity ETF
Which allocation?	60% equities vs. 80% vs. 100%
Which factor?	Value, momentum, size, quality
Which region?	Canada, U.S., developed markets, emerging markets
Which asset class?	Stocks, bonds, REITs, private markets
Which strategy?	Market-cap weighting, factor investing, dividend investing

None of these questions are bad on their own. The problem starts when there is always another question — and you end up spending more time managing your portfolio than managing your financial life.

A portfolio does not need to be complicated to be diversified.

There is always something “better”

This is one of the biggest traps for investors who enjoy researching. You build a diversified portfolio today. Six months later, you discover another ETF — slightly lower fee, slightly different factor exposure, better-looking historical performance. You start wondering whether you should switch.

Then another one comes along. And another.

The financial industry has no shortage of products to consider, and financial media has no shortage of reasons to make you think you should be considering them. But investing doesn’t require an answer to every new idea — it requires a reasonable plan, followed consistently.

The hidden cost of optimizing

The time you spend researching has an opportunity cost. Two hours comparing one diversified ETF to another is two hours not spent on your career, your relationships, or simply enjoying your life.

This doesn’t mean investing is unimportant — it means investing is only one part of a good financial life.

Your portfolio should support your life. Your life shouldn’t revolve around your portfolio.

What simplicity actually means (and doesn’t)

Simplicity isn’t the same as carelessness. It should come after the important decisions:

Your financial goals
Your time horizon
Your risk tolerance
Your asset allocation
Diversification
Investment costs
Taxes
Your account types
How much you can save

Once those are settled, there’s often surprisingly little left to optimize. Vanguard makes a similar argument through its four principles for investment success: goals, balance, cost, and discipline — with an emphasis on focusing on what investors can actually control. Notice what isn’t on that list: finding the perfect ETF.

Side-by-side: what simplicity is and isn’t

Simplicity means	Simplicity does NOT mean
Making key decisions once, deliberately	Ignoring your finances
Reviewing your plan when circumstances change	Never reviewing your portfolio
Owning broad, low-cost, diversified funds	Buying whatever is popular
Staying invested through noise	Taking more risk than you can handle
Rebalancing when necessary	Ignoring taxes or investment costs

The difference is between reviewing your plan and constantly questioning your plan. Those are two very different things.

Your savings rate may matter more than your ETF selection

We often spend far more time discussing investment returns than discussing how much we actually invest. But your balance is shaped by both contributions and returns — and you control your contributions far more directly than you control the market.

Vanguard similarly emphasizes that savings and investment returns both contribute to reaching financial goals, and that how much you save is one of the few variables fully within your control.

A simplified example:

Investor	Annual contribution	Investment approach
Investor A	$5,000	Constantly changes strategies
Investor B	$10,000	Simple, diversified portfolio

Investor B doesn’t need to discover the perfect ETF. They just need to keep investing.

Costs and returns still matter — but investors tend to obsess over variables they barely control while ignoring the ones they do:

How much do you save?
How consistently do you invest?
How much risk are you taking?
How much are you paying?
Do you stay invested?

Those questions matter far more than finding the next clever ETF.

Simplicity can make diversification easier

Owning 15 ETFs doesn’t automatically mean better diversification than owning one broad fund — it depends on what those ETFs actually hold. A Canadian equity ETF, a U.S. equity ETF, a tech ETF, a growth ETF, and an S&P 500 ETF can add up to many tickers with heavy overlap in the same companies and sectors.

The number of ETFs isn’t the objective. Diversification is the objective.

A single broadly diversified fund can give an investor exposure to thousands of companies across multiple countries and sectors — making the portfolio easier to understand and maintain.

The real benefit: fewer decisions

Every additional investment decision is another opportunity to make a mistake. You might:

Change your allocation after a market crash
Sell something because it underperformed
Buy something because it recently performed well
Chase a new investment trend
Increase risk because you feel confident
Reduce risk because you become nervous
Constantly compare your portfolio with someone else’s

A simple strategy doesn’t eliminate these temptations, but it reduces how many decisions you have to make — and fewer decisions make it easier to stay disciplined.

S&P Dow Jones Indices’ SPIVA research is a useful reminder of how hard it is to consistently beat broad benchmarks. In its 2025 Canada scorecard, more than 85% of actively managed Canadian funds underperformed their benchmarks on average, with underperformance generally increasing over longer periods.

That doesn’t prove every simple portfolio beats every complicated one. It shows something more modest: consistently beating a broad market benchmark is difficult — so it may not be worth making your own process unnecessarily difficult either.

Simple investing gives you something valuable: time

I don’t want investing to be the most interesting part of my financial life. I want it to work in the background: contribute regularly, maintain a sensible allocation, keep costs reasonable, rebalance when necessary — and then get on with my life.

There are things that matter more to my future than finding an ETF marginally better than the one I already own:

My career. My income. My relationships. My health. My skills. My family. My time.

The goal isn’t the perfect portfolio

There is no universally perfect portfolio — only one that’s appropriate for a particular person, at a particular point in life, with particular goals and constraints. And even then, you could make endless small adjustments. The real question is whether those adjustments are worth the time and complexity they create.

I would rather have a portfolio that is good, diversified, inexpensive, and easy to maintain than one that is theoretically better but requires constant attention.

You don’t need the perfect portfolio. You need a good plan that you can stick with.

FAQ

Is a simple portfolio less diversified than a complex one? Not necessarily. A single broad-market fund can hold thousands of underlying companies across countries and sectors — often more effectively diversified than several overlapping funds.

How often should I review a simple portfolio? Review it when there’s a meaningful reason to — a change in goals, risk tolerance, or life circumstances — not on a constant, reactive basis.

Does “simple” mean I should never make changes? No. It means avoiding unnecessary changes driven by short-term noise, not avoiding necessary changes driven by real shifts in your situation.

Does a lower fee always mean a better ETF? Not on its own. Fees matter, but so does the fund’s actual diversification, structure, and fit with your goals and risk tolerance.

The takeaway

You don’t need to find the perfect investment portfolio. A simple, diversified strategy that fits your goals — and that you can consistently follow — can be more valuable than an endlessly optimized portfolio that keeps you second-guessing yourself.

Sometimes, the best improvement you can make to your investment strategy is to stop changing it.

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Sources and further reading

Disclaimer This article is for educational and informational purposes only. It does not constitute financial, investment, tax, legal, or other professional advice. Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results. The examples and opinions presented are general in nature and may not be appropriate for your individual circumstances. Before making investment decisions, consider your own financial situation, objectives, risk tolerance, time horizon, tax situation, and investment knowledge. If you are unsure about what is appropriate for you, consider consulting a qualified financial professional.