“The best strategy is the strategy you can stick with through thick and thin. That will differ for all investors.” – Wes Gray
Investing is to a large degree a solved problem. We know, by and large, what works and mostly what doesn’t. But that doesn’t means that everyone should invest exactly alike. Don’t let anyone tell you otherwise.
Why? Because we all have unique situations, differing histories and wildly varying risk tolerances. Constructing an efficient portfolio today is straightforward. Humans are not. Dialing in a portfolio in sync with our risk tolerance is no small feat.
There are as many solutions as there are people. For some people holding more cash than can be reasonable is a way to sleep better at night. This may not jibe with most models but it works for them. For others 100% equities is perfectly reasonable.
For other people kicking the cash habit is really difficult. For them a structured note might be a way to get equity exposure. For others it might one of these new defined outcome ETFs. So long as they products are low cost, transparent and risk appropriate for the end user. Who are we to judge?
One potential solution to these debates may be direct indexing. Direct indexing lets an investor and their advisor fine tune portfolios based on any number of factors. Risk clearly, but other factors like ESG indicators as well.
The point is there is no perfect way to invest. Just as there is no perfect way to parent. Everyone parent, child and situation is different. Parenting like investing requires consistency and care, not perfection.
Have you made some mistakes getting to where are you are today? Everyone has. Nobody hits on an investment strategy that works for them right out of the gate. Even if they did it would have to change with them over time. As Kristine Hayes at Humble Dollar writes:
As with most things in life, there’s no “one size fits all” solution when it comes to finances. Rather than questioning the decisions I’ve made in the past, I’m beginning to appreciate the things I’ve done right.