Are Investors Their Own Worst Enemy?
When it comes to investing, people can be their own worst enemy. Nearly all of the mistakes made by investors can be attributed to their behavior which is typically dictated by their emotions. Fear and greed have a way of driving even the most rational people to making investing decision which is why most investors typically under perform the markets. According to a 2015 study by DALBAR, the returns most investors experience lag the actual returns of the mutual funds they buy. In 2014, the average equity mutual fund investor under performed the S&P 500 by a wide margin of 8.19%. Over the 20-year period ending in 2014, the S&P 500 index returned 9.85%, but the average equity fund investor only earned 4.66%.*