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We have done a lot of shows on how much you should be saving, and plenty of people wonder how we come up with the rates of return we mention. We actually think these are great questions, so in this episode of The Money Guy Show, we get into historical averages and how we arrive at the rates of return we discuss in this episode and others.
Investing is a powerful tool that can help you put your army of dollar bills to work and build wealth. How much wealth? Well, join us as we take a look at the data.
Yes, you can make money investing. And, no, it’s not gambling! Tune in today as we share all the tools you need to maximize your money in the investment universe! We have the numbers that will prove you can make money investing, the experience to teach you how it all works, and how to use the most popular investment tools to your advantage!
Here is what you will learn in today’s episode:
- Historical asset class performance over the last 10 years and long term
- How to understand the impact behavior has on investor performance, as shown by Dalbar
- What historically happens when investors try to outperform the indices
- Over the last 20 years, how the average investor performed relative to the S&P 500 and what it reveals
- All the reasons why the average investor underforms indices
- The biggest mistakes people make when it comes to investing (even though they “know” better)
- Why people tend to be skeptical and cautious about investing, but what the data reveals is actually the natural state of the economy
- Why downturns and market volatility are beneficial to young investors
- What the absolute worst thing you can do with your investments during a market downturn
- What Dollar Cost Averaging is and how it works
- Why investing isn’t random, but follows a cyclical pattern and what investors can do to capitalize on that
- Which financial habits you should focus on more rather than chasing returns
- When target date retirement funds are most useful and how to know when you have possibly outgrown them
- How to overcome analysis paralysis when it comes to investing and just do it
Resources and Research Cited in this Episode
- The Average Investor Blown Away by Market Turmoil in 2018 (Dalbar)
- Why the Average Investor Earns Below Average Market Returns (The Balance)
Related Money Guy Shows
- Ways to Overcome Investment Analysis Paralysis
- Should You Pay Off Debt Before Investing?
- Top Investing Lessons from Warren Buffett’s Letter to Shareholders 2018
- How to Invest a Windfall of Cash: Dollar Cost Averaging vs Lump Sum
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