MFOHome About Commentary Discussions Funds The Best Resources Support Us!

Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

Sign In Register

Categories

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

Case for a ‘Good Enough’ Portfolio

Observant1
edited October 27 in Other Investing
Christine Benz pondered contradictory feedback after a recent, successful Bogleheads conference.
She came to the conclusion that the conference is attempting to serve two completely different audiences —
portfolio maximizers (or optimizers) and "satisficers."
Maximizers conduct deep research on how to best create a financial plan and manage their portfolios.
They'll often enjoy debating the finer points regarding their financial analysis/decisions.
Satisficers, on the other hand, are seeking acceptable options rather than optimal ones.
They're less interested in the nitty-gritty details and gravitate towards big-picture topics
like finding enough, retirement lifestyle considerations, and leaving a legacy, for example.

Throughout my investment career, I've tended to be a maximizer.
As I've entered the … umm, second half of my life, I'll strive to spend less time and energy managing my investments.
Are you seeking the optimal portfolio and very best investing solutions or will good enough do?

https://www.morningstar.com/personal-finance/case-good-enough-portfolio

Comments

  • larryB
    Good enough. But still not a 3 index fund boglehead.
  • yogibearbullyogibearbull
    There isn't much in the Bogleheads framework for DIYs to do. How many combos of 2 or 3 index fund portfolios can one make?

    Then, there are strategic-allocation (static income/conservative/moderate/aggressive allocations) and glide-path TDFs of index funds.

    But as Bogleheads have grown, there are many financial advisors who claim to follow indexing and present at Bogleheads conferences or attend looking for business.

    Christine Benz' dilemma is easy to understand from that angle.
  • Observant1
    @yogibearbull,

    If you don't mind sharing, are you a maximizer or satisficer?
  • FD1000
    edited October 27
    Neither. There’s a huge gap between the two.

    When I retired, I already had enough — all I needed was a 6% annual return, indefinitely. I could have gone with a simple 50/50 portfolio, but why? That approach would have allowed my portfolio to drop 20–30% from peak to trough.

    Instead, I set clear goals:
    -Earn at least 6% annually.
    -Make money every single year.
    -Never lose more than 3% from any recent high.
    -Outperform a traditional 50/50 portfolio.
    -Achieve the best possible risk-adjusted returns.

    I’ve met — and exceeded — all of those goals.

    =============

    During the accumulation phase from 1995 to retirement on 2018, my stock portion beat the SP500, and my bond portion did too...and with better risk/adjusted performance.
  • yogibearbullyogibearbull
    @Observant1, in most metrics, I am in the gray area - not at extreme high or low if ranges. Benz describes opposites - maximizer and satisfiers. So, I am neither but somewhere in between.
Sign In or Register to comment.