:max_bytes(150000):strip_icc()/GettyImages-513206834-1a5e5388850144be98bac1c0d0587914.jpg "New Study Proves Buffett Is Right About This One Thing—And It Could Be Costing You 15% Of Your Investment Returns")
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Key Takeaways
- Morningstar found that over the past decade, investors could have earned an 8.2% annual return compared with 7.2% if they had left their investments alone.
- The analysis suggests that often the best move is no move—unless you automate trading decisions entirely, removing emotion and timing risk from the equation.
- Warren Buffett has long endorsed such a hands-off approach for everyday investors—favoring simple index funds that have historically yielded better returns on average.
Want to earn a greater return on your investments? It might literally pay to do nothing.
When investing, you may be accustomed to making regular contributions, selling assets when you incur losses, or even mistakenly buying when the price is high. However, all these actions add up to a lower return, according to recent research from Morningstar.
The 2025 Morningstar analysis, in line with analyses of earlier decades, found that the annual investor return—essentially what people actually earned—was 7.0% over the 10 years ending Dec. 31, 2024. By contrast, the total return—what they could have earned by investing a lump sum and never touching it—would have been 8.2%.
Investors Could Earn A Greater Return By Waiting and Holding
So why is the total return 15% greater than the investor return?
The researchers point out that impulsive investor behavior (like buying or selling based on dips) and even what you might think of as good behavior—like contributing regularly or periodically rebalancing—can erode returns.
And while those saving for retirement or other financial goals shouldn’t stop allocating a portion of their paychecks toward their investments, the researchers do suggest that investors be more discerning when deciding whether to buy or sell.
The type of investing that had the smallest gap between total return and investor return was allocation funds, like target-date funds, which automatically make your portfolio more conservative as you approach retirement age.
With these funds, investors take a hands-off approach, so they don’t need to transact regularly—thus minimizing the element of timing risk.
Buffett’s Case for Most People Doing Nothing
This approach has been endorsed by Buffett, chair and CEO of Berkshire Hathaway Inc. (BRK.A, BRK.B), for retail investors.
“We don’t think it’s improper actually for people who are passive investors just to make a few simple investments and sit [with them] for life,” said Buffett at the 2025 Berkshire Hathaway annual meeting.
However, Buffett acknowledged that this isn’t a strategy that he and his now-deceased business partner, Charlie Munger, abided by because they had the time and expertise to trade that way. “But we’ve made the decision to be in this business, so we think we can do a little better than that by behaving in a very irregular manner,” he said.
