Investment returns vs. investor returns
The investor has to understand the meaning of these two terms to get a better grasp of their investment situation.
Aug 19, 2018 07:08 IST India Infoline News Service

What are investment returns?
The investment return or Return on Investment (RoI) is a scale that measures the returns on a portfolio over a period of time. The investment return value tells the investor whether their portfolio has been grossing returns more than the investment cost. Investment returns calculate the overall value of the fund.
What are investor returns?
Investor return is the value of the total purchases minus the total sales of the investor’s portfolio. Investor return also measures that how an average investor has fared in the markets. It is similar to the internal rate of return ratio (IRR).
Investment returns vs. investor returns
Most often, investor returns are quite low compared to investment returns because of what Carl Richards, a certified financial planner and a best-selling author, calls “Behavior Gap.” Many investors do not stay invested for longer periods in an asset, thus, leading to fewer returns.
Below listed are some of the factors that detail the reasons why investment return is higher than investor return.
- Insufficient knowledge and wrong decisions
- Duration of investment
- Involvement of emotions
- Following the herd
Here are some tips that can increase investor returns:
- The investor should have an investment strategy according to their financial status and risk appetite.
- If unable to devise an investment strategy, it is prudent to seek advice from an experienced financial advisor.
- An investor should develop investing discipline and be free of emotions when managing their portfolio.
- Regular evaluation of the investment portfolio as per the changes in the financial status or economic conditions.
- The investor should not panic when the market is volatile, as market correction happens often.
- An investor can seek the advice of an expert but, at the same time, carry out their research.