“Making money is easy. Keeping it is hard.” — Unknown
Many investors focus on gross returns—returns before considering fees, taxes, and inflation (a.k.a. “frictions”).
Earning a 10% return might sound impressive, but what happens when you account for:
You don't want to brag about your net returns at the cocktail party after accounting for all of that.
Our tax system incentivizes investing over saving, which is why fixed-income investors in taxable accounts often struggle to keep pace with inflation after accounting for taxes. Fixed-income investments typically have lower expected returns than equities and are taxed at higher rates. While they provide stability for anticipated withdrawals, over-allocating to them can hinder growth of long-term wealth.
A friend of mine once boasted about rental properties he bought for $40,000 that generated $1,000 a month in rental income. Unfortunately, the “frictions” he ignored—property taxes, maintenance, insurance, and vacancies—caught up with him, and he’s no longer a landlord.
Gross returns impress, but net returns bless.
“Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ. Rationality is essential.” — Warren Buffett
“It’s better to have an IQ of 130 and think it’s 120 than to have an IQ of 150 and think it’s 160.” — Charlie Munger
Years ago, I worked with a client who was world renowned as one of the best in their profession. They had co-authored over 200 articles in prestigious publications and journals. While working together, they were rumored to soon be nominated for a Nobel Prize (which did not materialize). By all measures, this person was a genius.
During a review meeting, we looked at their 15%+ investment returns from the previous year. Their response? “I was expecting better.”
I was surprised, as their returns aligned with market benchmarks. So, I asked, “What kind of returns are you expecting long-term?”
Their answer: “At least 20%–25% a year.”
I was shocked. This brilliant person—one of the best in their field—was out of touch with realistic investment expectations. To put it in perspective, Warren Buffett has “only” compounded at 19.9% annually over his career.
Having a high IQ can be a curse for investors. Many believe their intelligence translates into above-average investment results, but research tells a different story.
Financial researcher, Larry Swedroe, once shared a striking example in his analysis of the Mensa Investment Club—a group requiring members to have an IQ in the top 2%. Over a 15-year period, they earned just 2.5% annually, underperforming the S&P 500 by almost 13% per year. One investor described their strategy as “buy low, sell lower.”
A Morningstar study revealed that, over the past 10 years, the average investor lagged behind the very funds they invested in by 1.1% annually—purely due to poor timing and lack of patience.
More brains ≠ better returns. Temperament wins.
"Your assumptions are your windows on the world. Scrub them off every once in a while, or the light won’t come in." — Isaac Asimov
One undeniable truth about investing: in aggregate, investors collectively earn the market’s return. Some will do better, some will do worse, but as a group, we must match the market’s return.
If you try to beat the market, you need an edge. Wesley Gray, founder of Alpha Architect, once argued there are only three possible edges:
Given that Gray—a Wharton grad with a Ph.D. from the University of Chicago—focuses his investment strategy on patience, what does that say about the likelihood of edges #1 and #2 working for the average investor?
The reality: your only real potential edge is patience.
Yet, every month of my career, someone has shared a dire market forecast with me, convinced they’re ahead of Wall Street. But if a crash were truly obvious, it would have already happened. More often than not, investors fall victim to confirmation bias, seeking out news that aligns with their fears.
Instead of chasing an elusive edge, focus on the one you could actually have: patience.
“Patience is bitter, but its fruit is sweet.” — Aristotle
“The greatest enemy of a good plan is the dream of a perfect plan.” — Carl von Clausewitz
Investors today face a never-ending stream of temptation:
All of this fuels the urge to tinker with your investments.
But here’s the truth: the perfect portfolio doesn’t exist. And the more you chase it, the worse your performance will likely be.
“The greatest enemy of a good investment plan is the siren song of the next great investment.” — Burton Malkiel
✅ Net returns matter more than gross returns. Taxes, fees, and inflation are real costs.
✅ IQ doesn’t translate to better investment results—temperament does.
✅ Unless you’re a professional with an informational advantage, you don’t have an edge. Patience is your only superpower.
✅ Don’t waste time chasing the perfect portfolio—it doesn’t exist.
📌 Want to invest smarter? Stay patient, keep it simple, and focus on the long game.
Meredith Wealth Planning, LLC is a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Past performance is not indicative of future results. Investments involve risk and are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.
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