Carl Richards' Behavior Gap #investing #investment #finance #personalfinance #money #success

Tell us what the behavior gap is. There's a difference between investments and investors. Like if you open the newspaper, the old fold out newspaper, and you see an ad for a mutual fund that says this fund returned 10% a year for 10 years. That's the investment return. That's the return you would have gotten if you put your money in at the beginning of that time period and you left it there. You didn't add or take any away, you left it there for the full 10 years. The problem is no one behaves that way. If you were to graph these two, you'd have a bar graph with two bars. One's the investment return at, let's just say X. The average investor return is something below X. And that difference in the return, I just labeled that the behavior gap. If you just held on to a mediocre quote, unquote, an average investment and you just behaved well, you would outperform 99% of your neighbors.