Average Investors Underperformed: Major Indices 1998 – 2017
Stop Changing Lanes
What This Chart Means to You: Don’t try to time getting in and out of the market. It’s like trying to go faster on a crowded freeway by constantly changing lanes, only to discover you are going slower than if you had just stayed in the lane you were in. Over the past 20 years, the S&P 500 returned an annual average of 7.20% but average U.S. stock investors earned just 5.29%, primarily because they tried to outsmart the market but kept getting in and out at the wrong times. Many investors think they know when to buy and sell. But this means they have to be right twice: picking the right time to buy and the right time to sell. Other investors might make emotional decisions, like pulling out of the market when stocks are losing.
This is where the experience and guidance of your financial advisor can make all the difference and help you stay “in your lane” and headed towards your goals.