Question: Why does an ETF sometimes grow faster than a Balanced Index Fund?

The biggest impact to your investment returns over the long-term is about your behaviour and your ability to accept short-term volatility. The more growth assets the more businesses you have within your portfolio the higher the return will be. But because these businesses are listed on stock exchanges and the ability to buy in and sell out based on fear or greed means there will always be significant short-term volatility. Of course, short-term volatility can be used to your advantage but psychologically it’s not what people do. To buy when it’s going down you are also watching your own portfolio and Superannuation assets go down. They are becoming cheaper but as they become cheaper it paralyse you and for many forces them to sell to protect the remaining assets the exact opposite to what we should be doing. For me as an advisor with over 28 years of experience and over 30 years as an investor understanding investor psychology and how to behave is more important than knowing the numbers such as profit and loss or the balance sheet of a business.

General advice only. #shares #property #financialadvice #investing #wealth