By: Dividend Sensei
Recently I wrote an article explaining how most investors just can’t help making stupid money losing investment decisions. It’s built right into our human psychology. In fact thanks to a lack of emotional control, the track record of individual investors has been abysmal over the decades. For example between 1996 and 2015 investors’ terrible market timing and “fly by the seat of your pants” style meant that the average portfolio not only underperformed the market, but all asset classes. Heck during this 20 year period investors even lost to inflation, which was very low historically speaking.
So it’s no surprise that more and more people are heeding the advice of legendary investors such as Warren Buffett who has said that the best strategy for most people is simply to dollar cost average into a low expense broad market index fund, such as VOO or SPY (both which track the S&P 500). And it’s certainly true that this strategy, if maintained over time, will likely help most people achieve their long-term financial goals. Assuming of course that you can adopt the proper mindset.