This is a simple question, but one I haven’t quite gotten straight in my head yet.
So mental accounting is a cognitive bias that should be avoided. However, goals-based investing is an acceptable investing style where you pyramid your portfolio in layers to reach specific goals.
Why is one acceptable and the other is not? Both involve dividing your portfolio up in order to gain different exposure to different markets. Why is pyramiding your portfolio ok for goal-based but not ok for mental accounting?
I’m sure I’m missing something obvious here but I haven’t quite gotten this straight in my head yet.