Why Shooting for the Moon Will Likely Lead to Below Average Results

You’ve probably heard the quote, “Shoot for the moon. Even if you miss, you’ll land among the stars.”¹ It’s from Norman Vincent Peale, one of the most famous proponents of the power of positive thinking. The underlying idea is that you should set an extremely ambitious goal and then if you don’t reach it, you’ll still do very well.

But, as uplifting as this strategy sounds, it’s usually not true. Research has shown that setting the bar for success unreasonably high most often results in below average performance.

The idea for exploring how extremely high goal setting affects outcomes came to economist Matt Burgess when he saw previous research on the efficiency of commercial fishing fleets. This earlier work found that fisheries performed best when boats stopped searching for fish once they reached higher-than-average catches.²

Burgess and his team looked at a wide range of scenarios, from starting a business to landing a job to hunting for a house. They found that optimal satisfaction came from setting the bar above average, but not excessively so. In fact, those who were overambitious fared worse on average than those who were under ambitious by the same margin.

For example, a baseball batter who swings for the fences on every pitch is likely to do worse (and be less satisfied) than a batter of equal ability whose goal is to simply get on base.

The researchers further found that social media is a significant factor in people setting their goals impractically high. The problem is that everyone tends to post only their greatest successes (many of which are unverifiable or easily emblished), which can distort your view of what constitutes normal.

The findings emphasize the importance of knowing the full range of possibilities, not just those bragged about on social media.

You’ve probably already realized how this insight could apply to saving and investing for retirement. Over the long-term, someone who is satisfied with good but realistic returns will do much better and be generally more content than someone who’s constantly chasing the next big thing.

In fact, research has shown that if your performance is on par with the S&P 500, you are already doing better than average. This is because the short-term behavior of the typical investor causes him or her to underperform the broad indexes.³

The idea is not to settle for less because that’s the easiest thing to do. But rather to pursue a realistic goal where you can identify and reach all the steps needed to accomplish it. Just dreaming big and hoping it happens isn’t an actionable plan. Swinging for the fences with your risk capital is speculating, not disciplined investing.

Knowing this, your trusted advisor starts with your life goals and circumstances and builds a financial plan that will help allow you to navigate along your unique path. By following it you are better equipped to achieve financial health today as well as a fully funded retirement tomorrow.

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