Fund Investors' Biggest Mistakes and How You Can Avoid Them
To become the best possible investor you can, it is imperative to avoid the big mistakes. Behavioral finance researchers investigate how human beings study and act on investment information and their findings can benefit investors.
Those who invest directly in stocks are particularly prone to making devastating mistakes, perhaps even experiencing Enron-style setbacks.
But mutual fund investors are not insulated against these mistakes. In fact, a fund manager can compound any mistakes made by fund owners—after all, professionals are human. Thus, it should come as no surprise that behavioral finance research makes a strong case for buying and holding low-cost, broadly diversified index funds.
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