Your behavior is the most important factor for investment success. Even if you do manage to pick the best performing investments, (which is something professional mutual fund managers can't even do consistently as shown here) panicking out of those investments during a downturn will likely cause permanent damage to your finances. Here are a few tips to help you avoid behavioral mistakes and survive whatever the market sends your way. Tip 1: Reassess your risk tolerance. Using a … [Read more...]
Are You Underperforming Your Own Investments?
My recent post titled To Index, Or Not To Index: That Is The Question! focused on the fact that most actively-managed mutual funds fail to outperform their benchmarks. It's bad enough that most funds underperform the market, but what's worse is that investors often underperform their own investments! The Quantitative Analysis of Investor Behavior (QAIB) is a report that Dalbar, a financial research company, has published since 1994. This study compares the performance of individual investors … [Read more...]