An Average Investor
Over the years, I have seen many studies comparing the average investor returns to the stock market and other asset class returns. One study over the 20-year period from 1996-2015 found the average investor had an average annual return of 2.1%, while the S&P Index had an average annual return of 8.2%. And this makes a difference. Consider a person saving for retirement and investing $5,000 annually over that 20-year time period. At the average investor rate of return of 2.1%, the individual has $125,281 at the end of the 20 years. If the person had simply invested in an index fund that tracked the S&P Index over the same time period, at the end of 20 years, he would have $250,126 or over $100,000 more dollars. On this page, we are going to discuss how to avoid being an average investor.