Personal Investing Constraints

How you invest should be dictated by your personal goals.
If that's "beating the SP500" that's your prerogative but to have your entire investment outlook governed by a desire to outperform a cap-weighted index of public equities (to the exclusion of other asset classes with other attributes), domiciled in the U.S., that's rebalanced quarterly would seem like a pretty arbitrary goal to a saver who just woke up from a 50-year coma.
Once we accept that how you invest is as personal as your goals, we leave lots of room for personal constraints. These include but are not limited to:
  • Drawdowns and volatility
  • Social responsibility or governance
  • Index funds or ETFs
  • Tax treatment
  • Personal preference (you hate the idea of being a landlord perhaps)
  • Degree of automation
  • Having an advisor
  • Having a "trading account
Restricting your choices usually has a hidden cost or missed opportunity. But just as constraints can often be a positive force in our lives, it can have salutory effects on investing outcomes. It can protect you from venturing too far into the unknown. Limiting your menu can buffer against the analysis paralysis that comes from having too many choices. Ultimately it can make your process easier to stick with.
The greatest workout program in the world is useless if it is inconvenient. A less optimal program that you stick to will maximize "area under the curve". The same is true for investing.