I know that a lot of people on RS are young, and have an idea of how the world works based on reality TV, social media, and instagram. You are going to be disappointed when you find that your $20k life savings, is good for about 2% return. In fact, you'll be lucky to beat inflation.
From Forbes magazine, 2014
Quote:
According to the latest 2014 release of Dalbar’s Quantitative Analysis of Investor Behavior (QAIB), the average investor in a blend of equities and fixed-income mutual funds has garnered only a 2.6% net annualized rate of return for the 10-year time period ending Dec. 31, 2013.
The same average investor hasn't fared any better over longer time frames. The 20-year annualized return comes in at 2.5%, while the 30-year annualized rate is just 1.9%. Wow! The average investor exclusively investing in just fixed-income funds has had an even worse experience.
The average investor exclusively investing in just fixed-income funds has had an even worse experience. The annualized return is 0.6% over 10 years, 0.7% over 20 years, and 0.7% over 30 years.
It is plain to see in the preceding chart that the average mutual fund investor has seriously underperformed against a variety of asset classes and has barely exceeded the rate of inflation. The average fixed-income investor has lost to inflation, losing valuable purchasing power.
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When I see someone harping about how you could have made 300% on Apple stock, I know I'm dealing with someone who has very little experience in the market. Like digitalis, and his little friend chronic604 above who have absolutely nothing to offer this thread.
Just look at the 10 year returns from 2004 to 2013 for an idea of how challenging it is to make money as an investor.
Of course our homes market wasn't hurt by the crash of 2008. But for the most part, this is what experienced investors have seen over the last decade.
One last note on returns, this is a good article from the Financial Post on why 6% per annum is the magic number for investors.
http://business.financialpost.com/pe...-rule-of-thumb