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In an Oct. 27 Morningstar article “The Case for a ‘Good Enough’ Portfolio,” Christine Benz asks the question, “Are you an optimizer or a satisficer?” [satisfice = satisfy+suffice] Do you continually search for ways to improve your portfolio, or are you happy with good enough? Reasons exist for each; no criticism implied for either.
I’ve been a happy satisficer for decades. I’ve made a few tweaks, mostly to adjust to changing life circumstances.
What about you? And what has led you to it?
For years/decades I’ve felt my portfolio was exactly where I wanted it to be…. Until it wasn’t. Now I consider tweaking it once a year, and I usually do
Ms. Benz’s article is worth reading in it entirety.
A Satisificer – her word choice – embodies the approach of not letting the perfect be the enemy of the good or, perhaps, the good enough.
We have an allocation of 50/43/7 and make minimal changes to the allocation or the portfolio. But the portfolio is an imperfect and not optimized collection: yes, lots of low expense index funds, but also a few actively managed funds, as well as some individual stocks and some individual bonds. Not optimized, but good enough to satisfy us.
I think anyone following some form of asset allocation, e.g.,60/40, 70/30, etc. is a Satisficer. It’s my guess that an Optimizer might not stick around on HD for very long.
Investing is one area where setting it and forgetting about it(satisficing) is likely to outperform frequently adjusting your investments in an effort to beat the market.
Satisficer? Honestly, I’ve never used that word before. Although I surmised its meaning, I looked it up just to be sure.
It’s not that I don’t try to optimize my choices, I do spend or waste some time agonizing over certain decisions. However, once I make a choice I am able to move on without regret.
AI tells me that satisficers are less likely to experience regret after a decision because they are happy with their choice, which is seen as sufficient. I reckon that fits me better than the optimizer label.
Benign neglect. I once participated in one of those investor clubs. I found corporate reports excruciatingly boring. Index funds get me the market return without any work – what’s not to like?
A few minutes ago I was saying to my brother in law that our portfolio (45/45/10) has returned 8.5% per year over the past 10 years and for the past few months have been continuously hitting all time highs while living off the assets for six of those 10 years. Why wouldn’t I be satisfied with that?
I’m definitely in the good enough camp.
No one is a a complete optimizer – that only comes with being lucky in hindsight.
I think the path to contentment is obviously being a satisficer but that doesn’t mean a person’s “good enough” is set and forget for ever. As always new information might inform a periodic change in strategy.
As in so much personal finance the question of what is enough looms large.
Set it and mostly forget it.
Yup 100%
We have a “couch potato” portfolio.
Once a year, after 2nd quarter end (July?), we take money from whichever of our index funds has done the best and add it to the money from our CD that has just matured … and buy another one.
Whatever our time-weighted ROI might be is fine by us. We don’t chase yields or returns.
We’re satisfied that we should have some money left over to leave for our kids.