“People still don’t understand the market isn’t their worst enemy; rather, it’s themselves. Impatience, lack of self-control, and knee-jerk reactions have devoured alive the investing public.”
That’s according to investment researchers at Morningstar. Here’s what we can learn from their latest study:
There’s a big and growing gap between mutual fund returns and what investors actually earn. By buying and selling at the wrong times, the typical investor lost over 2% per year in returns. If they would have just “bought and held,” they would have made substantially more money each year.
“Individual investors have a penchant to self-destruct,” says Morningstar. But that’s not how it needs to be. The secret is to buy low, sell high – not buy high, sell low. Stick to your investment strategy, and don’t let the market psych you out.
Better yet, if hard-headed investing isn’t in your genes, get an investment advisor to do it for you.