Composition of investments are important
https://www.goodreturns.co.nz/articl...or+29+May+2019
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considers how much to deviate from the optimal portfolio to reduce biased decisions, building a portfolio the client can stick with. It includes three criteria:
Relative level of wealth: investors with high levels of wealth compared to their lifestyle can afford to deviate away from the optimal portfolio
Standard of living risk: is the client’s standard of living at risk if their portfolio was sub-optimally allocated. High standard of living risk reduces ability to deviate from the optimal portfolio
Biases: the primary type of biases will also impact the decision. Cognitive biases are easier to moderate, proper education can reduce the need to deviate. Emotional biases are more difficult to deal with and will typically need to be adapted to allowing a larger deviation from the optimal portfolio would help the client stay the course."