fbpx
U

Above-Average Shopping and Investing

April 13, 2012

The average shopper may blindly pay retail price for their goods.  The average investor may make rookie investment choices that cost them dearly.  But Money-Guy listeners are anything but average when it comes to financial matters.  In today’s show, we talk about the rewards involved with being an above-average shopper and investor.

We have mentioned in past shows that we pride ourselves on saving 3-7%  more than the average person does on purchases.  A couple of our favorite shopping tools to stretch those dollars are:

  • Upromise:  Upromise is an incredible tool that allows you to accumulate savings for college by simply signing up and making everyday purchases.  They recently sent out a press release stating that their already-amazing service just got even better.  You can now earn 5% cash back (or more) with every Upromise online shopping purchase to go towards higher education.
  • Ebates:  Ebates is another great program that offers cash back on purchases at over 1,500 stores.  Additionally, you can sign up for a $10 gift card after your first time purchase of $25.

By using these tools along with various credit card rewards, you can shop smarter than the average person and reap the benefits of your hard work!

The second part of today’s show focuses on DALBAR, Inc.’s Quantitative Analysis of Investor Behavior.  Don’t let the long, boring name fool you.  The data here about what the average investor does wrong is actually really interesting.

  • Retention rates:  We always say that to be considered a long term investor, you want to be able to lock your money up for 5-7 years.  If you think you may need the money in the next 1-4 years, you might want to stay in cash.  Research shows, however, that for the last 20 years the average holding period for equities is 3.29 years and for the bond market, 3.09.  Despite evidence that long term investing produces greater return, investors are still reacting to market movements and getting out too early.
  • Market Timing Failure:  The report states that “for the calendar year of 2011, we can see more clearly how investors’ attempts to time the market are futile.  The largest uptick in the S&P 500 occurred in September, a month when fund flows were close to 0% of total assets.  Fund flows were near 10% of total assets 2 months later.  Unfortunately, by that time the S&P had lost nearly half of its September gains.”  Timing strategies and day trading is proven to be a bad strategy by this data.  No one has the magic ball that tells them what to do and when to do it.
  • Irrational Decisions Lead to Inferior Results.  We have been saying for awhile that what has been perceived as safe in the past is now riskier and vice versa.  The data shows that in 2011, investors lost 5.73% in their flight to “safety” compared to a gain of 2.12% for those simply holding the S&P 500 Index.  Additional data shows that on the 20-year level, the average equity investor made 3.49% while the S&P 500 made 7.81% for a 4.32% spread.  The average fixed income investor made .94% while Barclays Bond Index made 6.5% for a spread of 5.56%.

We challenge you guys to take a look at your performance over the years and see how you measure up.  If you are a Do-It-Yourselfer who has fallen prey to some of these bad investor behaviors, you may want to consider getting a professional to help you.  Volatility isn’t going anywhere and, unfortunately, the average investor is using fear and market timing and apparently they are paying for it.  We want all of our listeners to be above-average shoppers and investors and find financial freedom and success.

Most Recent Episodes

Can Money Buy Happiness? (Here’s the Truth)

Money and happiness aren’t directly correlated, but they are intertwined. Some believe that once they have a large, pie-in-the-sky amount of money, they will finally be happy. Others are working towards a more specific retirement number they hope will bring happiness....

Passive Income EXPOSED: 3 Ways to Actually Make Money (2022 Edition)

Passive income is a dream for many looking to get out of their 9-5 or just create extra income on the side. In this episode, we’ll break down different ways to actually earn passive income in 2022. In this episode, you'll learn: The easiest and hardest side hustles...

Millionaires Share Their Secrets to Financial Success! (2022 Edition)

It’s that time of year again: our annual Money Guy Wealth Survey episode. We’re back with all-new data for 2022, including new questions. You’ll learn who millionaires are, what they did to get there, and how they built their wealth. In this episode, you'll learn: The...

Dumb Financial Decisions That Americans Make! (Do You?)

Throughout our years of doing the show, we’ve seen more than our share of financial mistakes. Some are more common than others - in this episode, we’ll discuss some of the dumb financial decisions Americans make - and what you can do differently. In this episode,...

3 Things You SHOULD Spend Money On (Even During a Recession)

When is it okay to start spending money on things you want, but may not need? In this episode, we'll discuss when you can start spending money on "unnecessary" purchases, and what goods, services, and experiences are worth spending money on. In this episode, you'll...

3 WORST Types of Financial Crooks (Don’t Get Scammed!)

In the financial world, there are a lot of crooks that try to get into your pockets. From metaphorical crooks selling a bad product to literal crooks stealing your money, we'll cover the different types of financial crooks to watch out for and how you can protect...

Financial Advisors React to NFL Players Spending Their First Million!

Not many Americans will ever make over one million dollars in a year, but professional athletes regularly make that and more. In this react video, we'll see how NFL players spent their first million dollars after making it into the league. As we review their mistakes...

Everything You Need to Know About Real Estate Investing!

Over the years, we have had some great conversations about real estate investing. In this episode, we put together the ultimate guide to show you everything you need to know about real estate investing! In this episode, you'll learn: How to get started in real estate...

The Truth About The FIRE Movement! (Is FIRE Still Possible?)

Since the advent of the FIRE movement several decades ago, we have never experienced a period of higher inflation until now. With the market down over 20% and inflation at 40-year highs, is FIRE still possible in 2022? If it is, what does it take to become financially...