Well, this is a shocker…
This is exactly what the Dalbar Study measures. They measure the results of the market annually (S&P500) with the average results that individual investors have obtained.
So here goes (drum roll). This is for the period from 1991 through 2010:
- S&P500: 20-year Average 9.14%
- Average mutual fund Investor: 3.83%
So if you started with $10,000 in 1991, the average mutual fund investor would have ended up with $21,084 after the 20 year period. The S&P 500 index’s return provides an ending balance of $57,081.
For the same period, fixed income investors earned 1.01% compared to the Barclays Aggregate Bond Index return of 6.89%.
Why in both cases? According the Dalbar Study, “because investors lack knowledge and self-control.”
Here is the press release > http://www.dalbar.com/Portals/dalbar/cache/News/PressReleases/pressrelease040111.pdf
I am still amazed that people think of the stock market as “safer” place to park your money.
No matter what you decide to do, take the time to educate yourself. After all, we are talking about your money.