Earlier this week I had a post up noting that despite the “monsters” of the personal finance industry there is a great amount of solid educational materials out there for investors. The sad reality is that most investors need some remedial education in investing. Howard Gold at Marketwatch is losing faith that investors are capable of anything but playing out tired patterns:

Not only do most individual investors not know what they’re doing; they seem incapable of improving, according to DALBAR, a Boston-based market-research firm that measures and evaluates practices of financial-services firms…

After citing familiar figures on how individual investors substantially underperform the market averages because of terrible market timing, the firm, which has reported these statistics for 20 years, calls out investors’ obtuseness and the miserable failure of the financial-services industry to change their dysfunctional behavior.

This need to chase performance and the often inevitable underperformance is noticeable in this chart from a recent Vanguard report: Vanguard’s Principles for Investment Success.*


This chart comes from the first of four sections of the report which are designed to help an investor put together a coherent and comprehensive investment plan:

  • Goals: create clear and appropriate investment goals;
  • Balance: develop a suitable asset allocation using broadly diversified funds;
  • Cost: minimize costs;
  • Discipline: maintain perspective and long-term discipline.

It should be surprising that these four bullet points jibe with what William Bernstein writes about in his new e-book for novice (Millennial) investors If You Can: How Millennials Can Get Rich Slowly. Not surprisingly the Vanguard report costs even less than Bernstein’s new book, $0.00. Investor who read, comprehend and implement a plan congruent with the above four points will be ahead the vast majority of their peers when it comes to investing. It may not be sexy but it is important.

Hat tip: Pragmatic Capitalism

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Please see disclosures here.

Please see the Terms & Conditions page for a full disclaimer.