Dear All,
Please find below an article as appeared on Money Life for an interesting reading:
The ‘buy and hold’ investment strategy has taken on a different meaning, ‘buy and forget’. According to Fidelity, investors who forgot that they had an account performed the best. While it may not make sense to invest money and then simply forget about it, but investors who did unknowingly, earned a better return. Fidelity Investments reviewed the performance of their client’s account, what they found was that, accounts that performed the best were those account of investors who forgot that they had an account at Fidelity.
In fact, research by behavioural finance experts have found that investors who checked their portfolios monthly were more likely to move them in a more conservative direction than those who reviewed them annually. This behavioural trait is called "myopic loss aversion". It is based on human tendency to avoid losses, because the pain, we feel from a loss is twice as powerful as the pleasure, we feel from a gain. In the study, conducted by two famous behavioural psychologists—Daniel Kahneman and Amos Tversky—subjects were assigned simulated conditions that were similar to making portfolio decisions on a monthly or yearly basis.
Should you buy and forget your investments over fixed periods? While it is a dreaded thought for some, investors should take responsibility for their finances and put some rules in place and stick with them.
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