A new study proves Buffett is right about this, and it could cost you 15% of your investment returns

Do you want to get a greater return on your investments? It can be helpful to literally do nothing.

When investing, you may be in the habit of making regular contributions, selling assets when they make losses, or even mistakenly buying when the price is high. However, all of these actions result in a lower return, according to recent research from Morningstar.

Morningstar’s 2025 analysis, consistent with analyzes of previous decades, found that an investor’s annual return — essentially what people actually earned — was 7.0% over the 10 years ending December 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 can get a greater return by waiting and seeing

So why is the total return 15% greater than the investor’s return?

The researchers point out that reckless investor behavior (such as buying or selling on dips) and even what you might think is good behavior — such as regularly or periodically contributing to rebalancing — can erode returns.

While those saving for retirement or other financial goals shouldn’t stop allocating a portion of their paychecks to their investments, researchers suggest investors should be more discerning when making the decision to buy or sell.

The type of investment that had the smallest gap between total return and investor return was allocation funds, such as target-date funds, which automatically make your portfolio more conservative as you approach retirement.

By using these funds, investors take a hands-off approach, so they do not need to transact regularly – thus reducing the element of timing risk.

Buffett’s case for most people is doing nothing

This approach has been approved by Buffett, Chairman and CEO of Berkshire Hathaway Inc. (BRK.A, BRK.B), for individual investors.

“We don’t think it’s actually inappropriate for people who are passive investors to make some simple investments and sit back [with them] Buffett said at Berkshire Hathaway’s 2025 annual meeting.

However, Buffett acknowledged that this is not a strategy that he and his now-deceased trading partner, Charlie Munger, adhered to because they had the time and experience to trade this way. “But we made the decision to get into this business, so we think we can do a little better than that by acting in a very erratic way,” he added.