Sometimes it pays to be wishy-washy if you’re an investor. That goes against what investors typically think. They mistakenly believe that every financial decision has to be all-or-nothing. Examples: “Do I load up on a bargain-priced stock or wait for it to fall further?”…“Do I convert my traditional IRA into a Roth IRA or just leave it alone?”

But such binary thinking can be detrimental. There’s a better way—one practiced by many successful professional investors. When they are faced with a difficult decision, those investors often take a small step, see how it works out, then reevaluate what the next step should be. Even Warren Buffett often tiptoes into a new holding at first, then waits until he sees a strategic advantage before he buys more.

I had a client earlier this year with $600,000 in cash to invest. He was struggling with whether to seize a risky opportunity and put the money into the cheapest part of the market—energy stocks—or stay away because it could see a lot more pain. I suggested he invest $100,000 in energy and watch the sector for the next six months. If share prices dropped, he could buy at an even lower price. If they rose, he would miss out on some gains but perhaps have a clearer idea of whether the sector was really turning around.

Another client, a woman in her early 70s, had a $750,000 traditional IRA. She talked every year about converting it to a tax-free Roth IRA to leave to her grandchildren, but the idea of paying a huge tax bill upon converting the traditional IRA seemed overwhelming. I finally convinced her to convert just $5,000 this year. Next year, if she’s comfortable, we may convert $10,000 and continue to increase the amount every year. Small moves can eventually have big payoffs, especially since the Roth could continue to grow tax-free when the grandchildren inherit it.

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