Dan Solin's Newsletter, March 16, 2017
There’s a way to vastly improve your returns, but it’s not very palatable: Die and don’t tell anyone about your account. They’ll probably find out about it after ten or twenty years. The returns are likely to be stellar.
That was the widely reported finding of a purported study by Fidelity. It found the investments that did the best were those of people who forgot they had them.
Unfortunately, according to Fidelity, no such study was ever produced, but that doesn’t change this basic point: There’s ample support for the view that your retirement portfolio “may be best served by giving it a solid dose of inattention.”
Financial journalist Barry Ritholtz noted his experience with situations where litigation over inherited assets prevented heirs from touching investments for ten or twenty years. The heirs subsequently found those years of inactivity were the best periods of performance.
How’s this possible? The absence of financial advice about when to get in and out of the market impacts returns positively. Investors who respond to short-term news, follow current events, rely on the financial media and on advice from “professionals,” suffer as a consequence.
Want to improve your returns?
Ignore your investments.