jump to navigation

More Evidence of Poor Investor Performance July 24, 2018

Posted by shaferfinancial in Finance, mutual funds, Uncategorized.
trackback

Usually, at least once a year, I post recent Dalbar, Inc. results for investor mutual fund performance.  It does get redundant to keep posting the same underperformance for investors.  The vast majority of folks will continue to ignore these results in some sort of “not me” denial of the obvious.

To break things up, here is a bar chart from JP Morgan. They include in their average investor bar the latest Dalbar results [2.6%].  Note which is the second lowest!!

What this chart is pointing out is that the average American who invests in mutual funds inside their 401K/403B/IRA and their home [80% of average American wealth resides in their home] have barely gotten over 3% returns over the last 20 years.  And they have the majority of their wealth in places that are hard to get to without penalties.  There are substantial tax penalties when drawing from a 401K even if you are over 59 1/2,  You have to pay income tax [both federal and state] on those withdrawals. [Roth’s you do not.] And real estate you either have to sell your home and pay a realtor or you have to mortgage your home and pay interest to access your money.

So, not only are Americans getting a very small return, but they have to pay for the right to access their money from these places. And when the average American really needs to get at these funds, like after being laid off or getting sick, the penalties are high and you probably won’t get a mortgage without a job.

Does this really make financial sense?

Feeling more secure now?

 

 

Comments»

No comments yet — be the first.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: