behaviour
Mind the behaviour gap
The rule
Your own return often trails the fund's return, and the gap is the price of your timing. Money that comes in, pauses, switches, or leaves at the wrong moments.
Where it flips
But not every gap is your fault. Sometimes a lower personal return comes from planned, needed withdrawals for a real goal, not from panic. The gap names avoidable timing mistakes, not every difference between fund and investor.
Richards named a quiet everyday sadness. A fund can show a decent long return while its investors feel let down. The fund's number assumes the money just stayed put, but real money moves. The fund's return counts time; your return counts your cash. It is shaped by when you started, paused, switched, or left. Joining after a strong run and leaving after a weak one opens a gap between what the fund earned and what you earned. That gap is the price of behaviour. If you stopped a SIP in a bad year and came back after the recovery, the fund did one thing while your timing did another. The fix is not shame. It is a smaller, calmer plan and rules that survive weak times.
A worked example
A fund posts a solid ten-year return. But an investor who paused his ₹10,000 SIP through the weak months and rejoined after the bounce trails it. He skipped the cheap units the fund's own number assumed he bought. [illustrative]
How to spot it
- ·the fund's path and your own cash path are told apart
- ·paused months and panic switches are named honestly
- ·there is a written rule for how to behave in the next weak spell
Carl Richards · The Behavior Gap