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Decision Paralysis: The Rise to One Million Investment Choices



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Decision Paralysis: The Rise to One Million Investment Choices
Decision Paralysis: The Rise to One Million Investment Choices

Decision Paralysis: The Rise to One Million Investment Choices

By 2031, there could be one million managed investment products. As the number of investment choices grows, investors are suffering from decision paralysis.

We partnered with Morningstar to show the rise in investment products over time, and how financial advisors can help.

Investment Product Growth Over Time

There were just over 30,000 managed investment products in 2002, but the choices grew rapidly in the years that followed. As of June 30, 2023, there were more than 742,000 products available.

YearNumber of Managed Investment Products

Source: Morningstar, 2023 data is as of June 30. Managed products include closed end funds, collective investment trusts, exchange traded funds, global restricted funds, hedge funds, insurance product funds, models, open-end funds, separate accounts, UK LP subaccounts, VA subaccounts, and VL subaccounts.

In terms of the different product types, open-ended mutual funds are the most common. However, ETFs have seen the highest growth rate over the last two decades.

Growth rates for all managed products in total were the highest in the early 2000s, but the number of products has continued to grow in recent years. The projection of one million products by 2031 assumes the compound annual growth rate of 3.64% from 2017 to 2022 continues into the future.

Enjoying this content? Dive into more insights in the Voice of the Investor Report:

Report cover titled 5 Things Advisors Need to Know About the Evolving Investor with additional pages from the report shown. There is also a large yellow button that says Download the Report with an arrow hovering over it

Overcoming Decision Paralysis

People have access to more investment products and more advice than previous generations, but this doesn’t necessarily translate to more knowledge. Instead, this can lead to confusion and decision paralysis. In fact, 26% of people say they are uncomfortable making investment decisions, primarily due to a lack of knowledge.

Notably, investors don’t view advisors as being significantly more valuable than other information sources.

Source% Who Find Source Very/Extremely Valuable
Professional advisor57%
Investment or trading platform/website55%
Accountant or tax advisor53%
Business news e.g. Wall Street Journal50%
Financial websites e.g. Yahoo Finance49%

Source: Morningstar’s 2023 Voice of the Investor Study. The study is based on 2,003 U.S. adults who were not currently employed as a financial advisor.

However, the perceived value of advisors increases substantially once an investor begins working with one.

Status of Advisor Relationship% Who Find Advisor Very/Extremely Valuable
Do not work with an advisor (n=1,142)31%
Work with an advisor (n=861)90%

To help combat decision paralysis, advisors can provide actionable insights and curate options for investors. Want to learn more about today’s investors and their unique needs?

Download Morningstar’s Voice of the Investor report.

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Markets in a Minute

Visualizing the Growth of $100, by Asset Class

In this graphic, we show asset class returns across U.S. equities, bonds, real estate, gold and cash since 1970.



This line chart shows the growth of a $100 investment between 1970 and 2023 by asset class.

Visualizing the Growth of $100, by Asset Class

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

Which major asset class has generated the strongest returns over the long run? How do the returns of investments like bonds and real estate actually stack up?

To put investment returns in perspective, this graphic shows the growth of $100 by asset class over the long term, based on data from Aswath Damodaran at NYU Stern.

Comparing Asset Class Returns

Below, we show the returns of a $100 investment across major asset classes—from U.S. stocks to gold—between 1970 and 2023:

YearS&P 500Corporate
GoldU.S. 10-Year
Treasury Bonds
Real EstateCash

Numbers have been rounded. S&P 500 includes dividends. Cash represented by 3-Month U.S. T-Bills. Corporate Bonds represented by Baa corporate bonds. Real Estate represented by the Case-Shiller Home Price Index.

As we can see, a $100 investment in the S&P 500 (including reinvested dividends) in 1970 would be worth an impressive $22,419 in 2023.

Not only were U.S. stocks the top performing major asset class, they outpaced other investments by a wide margin. Consider how a $100 investment in corporate bonds would have grown to $7,775 over the period, or 65% lower than an investment in the S&P 500.

When it comes to gold, a $100 investment would have been worth $5,545 by 2023. During the 1970s and 2000s, gold boomed amid bouts of inflation and a falling U.S. dollar. By comparison, the S&P 500 saw much lower returns over these decades.

Real estate, another safe haven asset, grew on average 5.5% annually since 1970, with the highest gains seen in the decade through 2020. It’s worth noting that these numbers are from the Case-Shiller Home Price Index, which is based on purely price changes over time.

Given that real estate is a unique asset class, this doesn’t necessarily illustrate the returns that homeowners actually receive, factoring in leverage, property taxes, insurance, and other expenses. From this price perspective, a $100 investment would have grown to just $1,542 by 2023 due to slower price growth through the 1980s and 2000s weighing on overall gains.

During both periods, the housing market crashed, taking years for the sector to fully recover. In fact, following the Global Financial Crisis, it took a decade for home prices to climb to their previous 2006 peak.

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How Small Investments Make a Big Impact Over Time

Compound interest is a powerful force in building wealth. Here’s how it impacts even the most modest portfolio over the long-term.



This bar chart shows the power of compound interest and regular contributions over time.

How Small Investments Make a Big Impact Over Time

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

Time is an investor’s biggest ally, even if they start with just a modest portfolio.

The reason behind this is compounding interest, of course, thanks to its ability to magnify returns as interest earns interest on itself. With a fortune of $159 billion, Warren Buffett largely credits compound interest as a vital ingredient to his success—describing it like a snowball collecting snow as it rolls down a very long hill.

This graphic shows how compound interest can dramatically impact the value of an investor’s portfolio over longer periods of time, based on data from

Why Compound Interest is a Powerful Force

Below, we show how investing $100 each month, with a 10% annual return starting at the age of 25 can generate outsized returns by simply staying the course:

AgeTotal ContributionsInterestPortfolio Value

Portfolio value is at end of each time period. All time periods are five years except for the first year (Age 25) which includes a $100 initial contribution. Interest is computed annually.

As we can see, the portfolio grows at a relatively slow pace over the first five years.

But as the portfolio continues to grow, the interest earned begins to exceed the contributions in under 15 years. That’s because interest is earned not only on the total contributions but on the accumulated interest itself. So by the age of 40, the total contributions are valued at $19,300 while the interest earned soars to $24,299.

Not only that, the interest earned soars to double the value of the investor’s contributions over the next five years—reaching $52,243 compared to the $25,300 in principal.

By the time the investor is 75, the power of compound interest becomes even more eye-opening. While the investor’s lifetime contributions totaled $61,300, the interest earned ballooned to 25 times that value, reaching $1,489,172.

In this way, it shows that investing consistently over time can benefit investors who stick it through stock market ups and downs.

The Two Key Ingredients to Growing Money

Generally speaking, building wealth involves two key pillars: time and rate of return.

Below, we show how these key factors can impact portfolios based on varying time horizons using a hypothetical example. Importantly, just a small difference in returns can make a huge impact on a portfolio’s end value:

Annual ReturnPortfolio Value
25 Year Investment Horizon
Portfolio Value
75 Year Investment Horizon

With this in mind, it’s important to take into account investment fees which can erode the value of your investments.

Even the difference of 1% in investment fees adds up over time, especially over the long run. Say an investor paid 1% in fees, and had an after-fee return of 9%. If they had a $100 starting investment, contributed monthly over a 25-year time span, their portfolio would be worth over $102,000 at the end of the period.

By comparison, a 10% return would have made over $119,000. In other words, they lost roughly $17,000 on their investment because of fees.

Another important factor to keep in mind is inflation. In order to preserve the value of your portfolio, its important to choose investments that beat inflation, which has historically averaged around 3.3%.

For perspective, since 1974 the S&P 500 has returned 12.5% on average annually (including reinvested dividends), 10-Year U.S. Treasury bonds have returned 6.6%, while real estate has averaged 5.6%. As we can see, each of these have outperformed inflation over longer horizons, with varying degrees of risk and return.

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