Take stock of your impulses

Being human costs so many investors dear

- with WARREN SHUTE

I frequently quote that we are physical beings run by our emotions: the way we feel affects our actions.

That's certainly true when it comes to investing, as historical data shows only too well.

For the 20 years up to last month, the MSCI World Index, which tracks large and midsize companies across 23 developed countries, averaged 10% a year.

You could simply leave your money to follow the combined ups and downs of those firms and it would double in value every seven years or so.

It's been fairly consistent over the years; in the last five years it has averaged 14% pa. The last 10 years have averaged 12% pa, and since 1970 it's averaged 10% pa.

But this isn't what most investors achieved. Over the last 20 years, the average equity fund investor returned only around 5% per year.