Welcome to the Stay Walthy podcast. I'm your host, Taylor Schulte, and if you're listening to this on Tuesday, September 14th, please keep me in your thoughts as I'll be on the road coming home from Northern California with three kids under five in my car.

My sister-in-law, Emily, just got married, but I don't even think she knows

I host a podcast. And I think your husband, Jake, only listens when I talk about Bitcoin and

NFTs. But just in case they're tuning in, one more big congrats to both of you. You guys are

awesome. Thank you very much for sharing your special day with me. And please, please add some low-cost index funds to your retirement savings.

Speaking of low-cost index funds, today I'm sharing some updated data on the gap between fund returns and what investors actually earned.

In fact, over the last 10 years, ending on December 31st, 2020,

mutual fund investors averaged a return of about 7.7% per year, which isn't bad. However,

the mutual funds themselves provided a return close to 9.5 percent per year during the same time period.

Before I share more, as always, you can grab the links and resources for today's episode by going

to you staywealthy.com forward slash 126. So this gap between investor returns and total returns

from mutual funds is often referred to as the behavior gap.

The reason why investors underperformed by almost 2% per year over the last 10 years is not because of hidden fees or taxes.

It's because of poorly timed purchases and sales of fund shares. If investors simply bought and

held for the entire 10 year time period, they would not have experienced this 2% gap. And remember,

this is a 2% per year, which in dollar terms and compounded over 10 years, that can turn into meaningful amounts left on

the table. By the way, this research and the data that I'm sharing today is a result of a study

that Morning Star does every year called Mind the Gap. I'll link to it in the show notes, but this gap,

this 1.7% gap between investor returns and total returns is in line with the

four previous rolling 10-year periods that they've tested. The gap has been between 1.6 and 1.8

percentage points per year each time they've run the study. What I really love about their study

is that they test different asset classes. And what I found refreshing is that plain vanilla stock

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