Morningstar recently released the annual update to their “Mind the Gap” study, which looks at how well investors do with various categories of mutual funds. That is, it specifically looks at how investors do as compared to the investments — looking to see whether investors make good or bad decisions with the timing of their purchases and sales.
You can find the writeup here. (You’ll need a free Morningstar account to read the article.)
As they have found repeatedly, investors do best with “allocation funds” (i.e., funds that hold a mix of stocks and bonds — balanced funds, target-date funds, etc). Because such funds are not as volatile, people have an easy time simply buying them and holding on to them.
I’ve been saying this for years based on my own experience, and I hear the same thing over and over again from readers.
Other Recommended Reading
- Why Complexity Sells from Morgan Housel
- What the CFP Board Needs To Do From Here from Bob Veres
- Should I Use IRA Funds or Social Security at Age 62? from Jim Blankenship
- Health Plan Confusion and Bad Decisions from Kim Blanton
- How Much Umbrella Insurance Do You Need? from Darrow Kirkpatrick
- Do You Really Need Another Computer Monitor? Yes. Yes, you do. from Angela Lashbrook
- Recession or Not, a Payroll Tax Cut Would Hurt Social Security from Michelle Singletary
Thanks for reading!
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SOURCE: Oblivious Investor – Read entire story here.
