Is a 'Discretionary Margin' Necessary for Investing? — How to Avoid Ruining Your Portfolio Out of Curiosity

Hello, this is Ko.

When I open the window at night, a cool breeze now comes in. Tonight, after finishing work, I opened the window and am writing this article while feeling the autumn breeze.

The other day, I wrote an article about my somewhat cluttered portfolio.

All Country, S&P 500, FANG+, Japanese stocks, real estate investments, and crypto assets.
Even though I’ve been investing for eight years, when I line them up, I thought to myself,

“Wow, I really hold a lot of different things…”

I thought that to myself as well.

I received a comment on that article to the effect of:

“Investing isn’t just about efficiency.”

The moment I read it, I thought, “That’s exactly right.”

I myself research FANG+ companies, buy Japanese stocks little by little, and follow crypto asset news.
Not all of this is for the sake of “increasing assets as efficiently as possible.”

I’m simply curious.

When I see something I don’t know, I want to look into it.
When I put even a little bit of my own money into something, news that I had been skipping over suddenly becomes interesting.

But at the same time, I also thought this:

“Investing isn’t just about efficiency” is actually a pretty dangerous way of thinking.

“Because I’m curious,” “Because it looks interesting,” “It’s a small amount, so it’s probably fine.”
These are all things I’ve said in the past (laughs).

The result of adding one thing after another like that was the portfolio I wrote about last time.

So this time,
I’ll think not about what to hold, but about how much freedom to allow.

I’ll think about that.

All Country is fine. Even so, what you’re curious about, you’re curious about.

As you continue to invest, don’t you ever feel the same way?

I know that ‘for the long term, index investing is fine.’ I am also steadily accumulating through the new NISA.

Yet, when I open social media, posts like ‘FANG+ is amazing,’ ‘NASDAQ 100 is rising,’ and ‘Bitcoin is at an all-time high’ keep appearing.

Then, I get a little curious. When I see corporate news, individual stocks look interesting too. When I see dividend reports for high-dividend stocks, I think those look good as well.

I am exactly this type of person.

For long-term wealth building, you should first build a foundation of low-cost index investing. I understand that standard approach. Even though I understand it, I still get curious. That is the tricky part.

In my previous article, I wrote that it is important to review what you own one by one and ask, ‘Can I explain in my own words why I own this?’

But, one thing bothered me afterward.

If there is a reason, is it okay to own anything?

That is probably not the case.

‘I want to study the company,’ ‘I want to learn about new technology,’ ‘It will be a good experience.’ If you put your mind to it, you can make up any number of reasons. If you do that, you are right back where you started.

What is needed is not just a reason to buy, but perhaps a boundary line that says, ‘You cannot go beyond this point.’

That thought also suddenly occurred to me.

Not a ‘play allocation,’ but a ‘leeway allocation’

I think it might be okay to have a small ‘leeway allocation’ within your wealth building.

The ‘leeway allocation’ I am referring to here is a place where you can temporarily set aside things you are curious about.

That is the image I have.

Actually, I used to call this a ‘play allocation.’ I used that expression in an article I wrote about crypto assets as well.

At the time, I called it ‘play’ in the sense of ‘keeping it clearly separate from the main body of wealth building.’

But, I have started to feel that is a bit different. Researching companies and checking my own intuition while watching price movements—what I am doing itself is not just for fun.

That is why, for now, it is a place to keep my curiosity while protecting the core

In that sense, I find it more fitting to call it a “leeway fund.”

Rather than a fund with a pre-determined percentage or amount, for me, it is closer to the mindset of “anything beyond this point will not be brought into the core of my asset formation.”

The “leeway fund” exists to protect, not to buy

The core of my asset formation is quite simple.

In the new NISA, I currently invest 50,000 yen per month in All Country and 50,000 yen per month in the S&P 500. This is the “core” that I do not change easily just because the market moves.

In the past, every time something caught my interest, I would think, “Wouldn’t this be better?” I still think that way now.
However, one thing has changed: I have started to separate the act of thinking from the act of moving the core.

At first, I also thought, “Isn’t a leeway fund just an excuse to buy various things?” In fact, if you use it incorrectly, that is exactly what it becomes. But looking back at my own actions, it was actually the opposite.

For example, AI-related stocks are rising with incredible momentum.
If I open social media, I see a stream of optimistic posts.

Then, naturally, I get curious.
“Wouldn’t it be better to increase this instead of the S&P 500?” Such thoughts cross my mind.

If I forbid all curiosity, those feelings go directly toward the core. I start wanting to change my accumulation targets. I start wanting to increase the amounts.

But if I decide, “If I’m curious, I’ll think about it in the leeway fund first,” it provides a buffer.

I research. I give it some time.
If it is still necessary, I try it out on a small scale. The foundation remains the same.

Thinking of it that way, for me, the leeway fund is
less of a place to buy unnecessary things, and more of a breakwater to keep curiosity from seeping into the core of my asset formation.

Once you put money in, the news suddenly becomes personal

Regarding the investments I keep in the leeway fund, I don’t think I necessarily have to judge them solely on whether they performed better than the S&P 500 or the All Country fund.

In my case, once I put in a little money, I suddenly get serious.

I might skip over free articles, but the moment 10,000 yen of my own money is involved, I start researching. Humans are pragmatic (laughs).

Even with a small amount, the moment my own money is involved, the way I see the news changes.
That is why I believe I am gaining more than just returns. However, using that as an excuse to increase it too much is wrong.

And sometimes,
“This doesn’t suit me.”

Sometimes you realize that. This has quite significant value.

What was scarier than the amount of money was it creeping into my daily life.

However, there is a pitfall here. If left unchecked, a discretionary allowance can easily grow.

It starts at 50,000 yen. It goes up a little to 100,000 yen. Thinking ‘it looks like it will keep growing,’ it becomes 200,000 yen.
If you look at social media, even more bullish opinions appear.
Before I knew it, I was checking the prices every day. Once it reaches this point, it is no longer the ‘discretionary’ amount I had in mind.

In the past, when I was doing short-term trading, there were times when I would be out with my family but only looking at my smartphone because I was worried about the market.

If the price went up, I would be in a slightly better mood. If it went down, I would be restless. Even though I was out with my family, the market was always in the back of my mind.

Looking back now, it wasn’t just the losses that were painful.

Investing had taken away a part of my life.

That is why now, I have started to care as much about ‘how much can I afford to have enter my daily life’ as I do about ‘how much can I afford to lose’.

Even 100,000 yen is too much for me if I end up opening the charts many times a day.
Conversely, even if the amount is a bit larger, it might be acceptable if I hardly notice it in my daily life.

This is not determined solely by the total asset value. It is something you cannot understand without looking at your own feelings.

The 3 rules I follow with my discretionary allowance now

Now, if I am going to have a discretionary allowance, I believe I should at least follow these three rules.

1. Even if something catches my eye, I don’t easily change my accumulation plan

Even now, when I see something soaring, I sometimes think, ‘Wouldn’t this be better?’ But if I changed my accumulation targets every time that happened, it would no longer be long-term investing.
Therefore, I keep the foundation as it is first. If I am interested, I consider it outside of that.

2. Don’t let it grow to a size that takes away time from my family

Checking prices while at work. Worrying about the market while traveling. Opening charts repeatedly before bed. Once it gets to that point, it is too big for me regardless of the amount.
I started investing because I wanted to improve my life. If investing makes my daily life unsettled, the order of priorities is reversed.

3. When I think ‘I want more,’ that is exactly when I should stop for a moment

This is still difficult even now.
When things are going up, I want to buy more. I think, ‘Just a little bit more.’ But looking back, this is usually when the discretionary allowance expands.

That is why recently, I stop for a moment precisely when things start to get most interesting.

I try to regain my composure in that kind of way.

Of course, there are people who don’t need a discretionary margin at all.

I have written this far, but I don’t think everyone needs a ‘discretionary margin’.

Invest in a single all-country fund. Check it a few times a year. Spend the rest of your time on work, family, and hobbies.
If you are perfectly satisfied with that, there is no need to go out of your way to make things complicated.

If you have no interest in company analysis and don’t particularly want to follow market news, then that is much simpler.

However, I think there are also people who feel, ‘I know index investing is fine, but there are things I’m curious about.’ I am one of them.

If you are that type, rather than trying to suppress your curiosity itself,

why not create a space where it’s okay to be curious?

I think it’s perfectly fine to have that kind of relationship with investing.

After 8 years, what I wanted to simplify wasn’t the number of products

It has been 8 years since I started investing in 2018. Looking back, I have always been searching for ‘better investment opportunities.’

I started by investing through a robo-advisor, then bought mutual funds, Japanese stocks, ETFs, and even dabbled in crypto assets. I learned some hard lessons with short-term trading.

I have taken quite a few detours.
If I had just stuck to an all-country fund, managing it would have been easier than it is now.

But I don’t think all those detours were a waste.

Over 8 years, I have finally begun to understand what I should change and what I should not change.

I have gradually come to understand that.

In the past, money for the future, investments I wanted to try, and things I wanted because their prices were rising were all in the same ‘investment’ box.
Now it’s a little different. There is a part I protect. Outside of that, there is a part where it’s okay to think.

In the end, what I wanted to simplify was perhaps not the number of products, but this boundary line.

Rather than ‘what to buy,’ it’s ‘what not to change’

From now on, I’m sure new investment opportunities that pique my interest will appear.
I don’t know what will come after AI. I don’t know what will happen to crypto assets. If another unknown financial product comes along, I will probably look into it.

However, I think that is fine. There is no need to stop being interested in things.

But, what I want to cherish each time is, what I will not change for the sake of that interest.

For me, the ‘leeway allocation’ is not a place to buy whatever I like as much as I want. It is a place to protect the long-term asset formation I want to continue while engaging with things that pique my curiosity.

Reading the comments on my previous article, I was reminded once again that ‘investing is not just about efficiency.’

If I were to put that thought into words,

It is not just about efficiency. That is precisely why you must decide for yourself how much of the non-efficient part you are willing to include. is the key.

After eight years of doing this, I have finally settled into that form.

How about you?

Are there things like All Country or S&P 500 that you have decided, ‘I will not change this part easily’?

Conversely, are there any investments you have kept that cannot be explained by efficiency alone? If so, please let me know in the comments.

What I am curious about lately is not so much what people hold, but rather the reason why they draw the line for their investments there.

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🪪 About the author | Ko🌱

I am a company employee who has been investing since the autumn of 2018.
After failing at short-term trading, I now focus on long-term accumulation and have over 50 million yen in financial assets. I write about asset formation for company employees and how to manage money, including both my successes and my detours. Recently, I have also started exploring side hustles using AI.

▼ If this is your first time reading, please check this out as well

※ This article summarizes my personal experience and thoughts and does not recommend the purchase of any specific financial products. Please make investment decisions at your own risk.

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