The results of research done by Dalbar Inc., a company which studies investor behaviour and analyses investor market returns, show that the average investor consistently earns below-average returns. For the twenty years ending 31/12/2015, the S&P 500 Index averaged 9.85% a year, a pretty attractive historical return. The average equity fund investor earned a market return of only 5.19%. Why is this?
The way we invest is heavily influenced by our biases and our emotions and this is, I believe, the main reason why we consistently get less than we should. We are prone to do the wrong things at the wrong time which consistently costs us money.
Too many of us make the following mistakes when investing:
1. We try to predict the future
2. We act on impulse
3. We bet our savings on tips and hunches
4. We are swayed by the media
There is a better way, proven to stack the odds in your favour. Talk to us now if you want to improve your investment returns.