Overcoming Investment Fears

A study by Morningstar for the decade beginning in 2000 suggests that average investors underperformed the mutual funds they invested in by 1.5 percent per year due to investing near highs and exiting near lows. The fear of making a mistake is especially heightened in those who retire or sell a business. They are faced with investing the majority of their wealth for the first time—and in a very turbulent market. They are also transitioning from the perceived safety of their particular business (which they understood and often controlled) to the unknown risks in the investment markets.This paper looks at strategies advisors can use to help clients avoid harmful inaction.