Mind the Gap

Don and Tom explore why real-life investors consistently underperform the market—thanks to emotional decisions, frequent trading, and flashy sector bets. They break down Morningstar’s “Mind the Gap” study and explain why your behavioral return often lags the market return. Listener questions lead into heated critiques of 403(b) plans packed with annuities, an exploration of the risks of overconcentration in the S&P 500, second-home planning in retirement, and the tax headache of unwinding inherited tech stocks. It’s a fast-paced episode packed with practical advice and sharp jabs at high-fee products and financial marketing nonsense. 0:04 Investor returns vs. market returns: why we underperform 1:32 Morningstar’s “Mind the Gap” study explained 2:59 Behavioral mistakes: trading too much, chasing sectors, style drift 4:48 Volatile funds lead to worse investor outcomes 6:39 Frank asks: What’s wrong with 403(b) plans? 9:14 The real problem with 403(b)s: annuities and teacher exploitation 13:12 Why annuities don’t belong in tax-deferred plans 14:04 How to escape a bad 403(b): 403bwise.org and “green light” plans 15:45 Listener Gabriel: Is S&P 500 enough for a long-term portfolio? 17:56 VOO vs. VT: Why global diversification matters 19:39 Concentration risk and emotional investing 22:08 Listener Garrett: Planning for a second home in retirement 25:10 Real estate reality: owning two homes isn’t always ideal 28:45 Listener Nina: Clarifying the senior tax deduction 30:07 Listener Jim: Where should I invest a $1M windfall? 32:47 Long-term strategy: globally diversified stock portfolios 34:27 Listener Lori: How to unwind a concentrated tech stock portfolio 35:20 Altria: A century of sin stocks and their surprising holdings 37:00 Program note: Tom solo next week—please call in! 38:46 English is weird: talk vs. tok, though vs. thru Learn more about your ad choices. Visit megaphone.fm/adchoices