By Chris Castles
Given the current investment markets you can’t help but wonder how you can get better returns.
But have you ever stopped to think what affects your investment returns the most?
Would it surprise you to learn that our behaviour is the single biggest factor that affects our financial success. Yes. It’s not picking the right share to buy, following the secret tips that others get and we don’t, or picking the doer upperer in the right suburb. It comes down to our behaviour.
Since 1994 Dalbar’s Quantitative Analysis of Investor Behavior has measured the effects of investor decisions to buy, sell and switch into and out of managed funds over short and long term timeframes. The report consistently shows that the average investor earns less, much less, than managed fund performance reports would suggest. (1)
In fact, in 2014 the 20 year annualised return for the S&P 500 was 9.85% pa while the average investor was only 5.19% pa – a gap of 4.66% pa1. On $100,000 invested that’s a massive $129,000 difference in return on investment!
Behaviour does matter.
Want to understand how your behaviour matters and what you can do to improve your situation? Call us on 1800 283 895.
(1) – DALBAR’s 21st Annual Quantitative Analysis of Investor Behavior 2015 Advisor Edition
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