Self-Inflicted Investment Wounds
A recent study concluded that individual investors under performed the markets by an average of 4.92% per year over the last 30 years through Dec 2019, 9.96% to 5.04%, which is a massive difference. For example:
10,000 invested at a steady, compounded 5.04% over thirty years would be $43716.10
10,000 invested at a steady, compounded 9.96% over thirty years would be $172,600.45.
The question is why? Short answer, it’s kind of how we’re wired. Somewhat emotional reactions to market movements. Wanting to get in on the gravy train when markets are soaring, and arriving late to the party, or getting nervous and selling near the bottom when things aren’t looking so good.
There are myriad other things that can influence how we humans react, i.e. mass media tends to be sensationalist in its presentation of current events, after all who is going to bother watching if everything is always fine.
A couple of old sayings come to mind; “It’s time in the market, not timing the market…” and you “must keep your head while those around you are losing theirs”. In other words, keep a steady hand- that’s where we come in.
We can help you design a portfolio that you are comfortable with and help you to gain perspective when things get choppy. We are always ready, willing and able to help you with your financial and investment planning needs and questions. In the meantime, take a step back and count to 10 before making any rash moves. (usually good advice in life as well as investing).