MinuteRead
30 min
Loading…
Every year, a research firm called DALBAR publishes a study that reveals something remarkable and deeply troubling. The study compares the returns of the average mutual fund with the returns of the average mutual fund investor. The results are consistent and sobering. Over a twenty-year period, the average equity fund returned roughly 8 percent per year. The average investor in those same funds earned less than 5 percent.
**Author:** Carl Richards
**Estimated Reading Time:** 45 minutes
**What You'll Learn:**
- Why smart people make dumb money decisions - The real reason your investment returns lag behind the market - How to stop sabotaging your financial future - Why the best financial plan is one you can actually follow - How to align your money with what actually matters to you
**Who This Book Is For:**
This book is for anyone who has ever felt anxious about money, confused by financial advice, or frustrated that their investments never seem to perform as well as they should. It is for people who suspect that the problem is not the market, the economy, or the investments themselves. The problem is us. If you have ever made a financial decision you later regretted, this book will help you understand why, and more importantly, how to stop repeating the pattern.
Every year, a research firm called DALBAR publishes a study that reveals something remarkable and deeply troubling. The study compares the returns of the average mutual fund with the returns of the average mutual fund investor. The results are consistent and sobering. Over a twenty-year period, the average equity fund returned roughly 8 percent per year. The average investor in those same funds earned less than 5 percent. Where did the missing 3 percent go? It did not disappear into fees. It did not vanish into some accounting error. It evaporated through a series of small, seemingly reasonable decisions made by millions of individual investors. They bought when they felt confident. They sold when they felt afraid. They chased performance. They reacted to headlines. They tried to outsmart the market and ended up outsmarting themselves. Carl Richards calls this gap between investment returns and investor returns the behavior gap. It is the single most important concept in personal finance, and almost nobody talks about it. The financial industry has a vested interest in keeping you focused on the wrong things. It wants you to believe that success comes from finding the right investment, the hot fund, the winning stock, the secret strategy. It wants you to believe that if you just had more information, better tools, or smarter advisors, you could beat the market. The industry makes money when you trade, when you switch funds, when you chase returns. It makes money from your activity, not from your success. Richards spent years working as a financial advisor before he realized that his clients did not need more information. They needed help managing their own behavior. They needed someone to protect them from themselves. The problem is not that investing is complicated. The problem is that we are human. We are emotional creatures trying…
Continue reading in the MinuteRead app
Get the complete 30-minute summary of The Behavior Gap
Get the complete summary in the appThe behavior gap is the difference between investment returns and investor returns. It is caused by your behavior, not t
There is no perfect investment. Build a portfolio around your goals, not around hot tips.
Ignore financial forecasts. No one can predict the future, and trying to act on predictions makes things worse.
Plans are worthless, but planning is essential. Stay flexible and adjust as life changes.
Money is emotional. Pause before making decisions and ask what you would advise a friend to do.
Take responsibility for your financial behavior. You cannot control the market, but you can control your actions.
"The Behavior Gap" is a strong fit if you want practical ideas around finance, money, self help, especially themes like the behavior gap is the difference between investment returns and investor returns. it is caused by your behavior, not t; there is no perfect investment. build a portfolio around your goals, not around hot tips. The MinuteRead summary distills these concepts into a focused read, whether you're deciding whether to buy the book or applying its lessons at work.
Motivated to help readers with i coined the term "behavior gap" to label the gap between investor returns and investment returns, Carl Richards wrote “The Behavior Gap” to package those ideas for a fast, focused read. In “The Behavior Gap”, Carl Richards focuses on i coined the term "behavior gap" to label the gap between investor returns and investment returns. Through “The Behavior Gap”, Carl Richards distills the core ideas on finance into lessons readers can absorb in a single short sitting.…
View all summaries by Carl RichardsContinue Reading
Access the complete 30-minute summary and thousands more nonfiction books in the MinuteRead app.
Continue reading the complete summary in the MinuteRead app.
