Probably the greatest cause is not always being in the market. Investors think the market is overvalued and think they can call market direction. Even Warren Buffet falls in this category with his 40% cash position. Over the past 15 years the S&P has averaged 13% per year. The lost opportunity cost if you are in cash is 9% per year.

Next comes being diversified into 40% bonds which is common. This produces a lost opportunity cost of about 3% per year on your whole portfolio.

The average investor holding period is 6 months. Every time you make a change you are typically selling something that has risen and buying an investment that has fallen in price. This is the exact opposite of the S&P which leads to underperformance. A better approach is to annually sell your worst 10% of holdings and buy either SPY or TQQQ. The typical improvement is 3 – 8% per year on your whole portfolio.

Commissions and fees can run 1% per year. Over 25 years this could be about 10% of your portfolio. That would be fine if the financial advisors had options that outperform the S&P. Only about 15% of advisors do. Too many investors are chasing too few good investments.

Finally investors tend to chase the hottest new idea which had great performance last year.

The best approach is to buy and hold the same great investments for the long haul. The best way is to hold cap weighted ETFs like SPY and TQQQ with annual rebalancing. These ETFs always hold a majority of the best stocks in both good and bad times.