Any investor would love to think he’s the next Warren Buffet, but according to data compiled by wealth management site Jemstep, the majority of us don’t have a clue what we’re doing.
“Investors are clearly harmed by their delusions of stock market expertise,” the site says. “Instead of staying the course, emotional biases drive investors to respond to the market’s ups and downs in a way that harms their financial well-being.”
The proof is in the pudding: The average stock fund investor netted just 1.9 per cent in annual returns for the 20-year period ending in 2008, according to the investor research firm Dalbar. If they’d kept their funds in the S&P 500 and maintained a diversified portfolio, they could have racked up 8.4 per cent in returns.
Look below to see how you could be letting your emotions wreck your investments: