At The Money: Don’t Underperform Your Own Investments!

In this episode of "Everybody's Business," Barry Ritholtz interviews Jeffrey Ptak, Managing Director at Morningstar, about the investor return gap, which is the difference between investment fund returns and the actual returns investors experience. Ptak explains that this gap, calculated by comparing time-weighted and dollar-weighted returns, is largely due to investor behavior, such as buying high and selling low. The discussion covers how different types of funds, like sector equity funds and ETFs, tend to have wider gaps, while target date funds in retirement plans show minimal gaps due to their automated, set-it-and-forget-it nature. Ptak advises investors to have a plan, diversify their assets, automate their investments, and avoid making impulsive decisions based on market volatility to minimize the gap and capture more of their funds' long-term returns.