In 2020, spooked investors withdrew half a trillion dollars when the pandemic sent markets tumbling, causing many to miss the subsequent gains when stocks rebounded.
The average investor earned 6.3% per year from 2013 to 2023, a full percentage point less than the average U.S. mutual fund and ETF’s total returns of 7.3%.
Your return won’t be the same as the buy-and-hold return. If you buy high and sell low, your return will lag the buy-and-hold return.
Investors tend to sell when the market is tanking and subsequently miss out on gains when stocks rebound, demonstrating poor timing in their investment decisions.
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