Only 1 in 3 people are on track to have enough savings to retire at 65. Why?
One reason is poor investment performance. Individual investors typically underperform the market by an average of 4.66% per year.
Doesn't sound like much?
*Based on a $25,000 equity portfolio
After 1 year you could have earned an additional $1,165.
Coffee Cup
That is more than the average American spends at coffee houses.
After 5 years you could have earned an additional $6,394.
Grocery
That is more than the average US family spends on food each year.
After 10 years you could have earned an additional $14,423.
Wedding
That is more than the average US couple spends on a wedding venue.
After 20 years you could have earned an additional $37,166.
House
That is more than the down payment for the average house in the U.S.
After 35 year you could have earned an additional $98,102.
Porsche 911
That is more than the price of a Porsche 911.
Why does this happen?
Some over-correct.
The amount that infrequent traders outperform “day traders” per year. Over 15 years, this costs day traders over $62,000 (based on a starting portfolio of $25,000)
Hand
Coin
Some ignore necessary changes.
Hand
Coin
The additional amount that investors lost, on average, during bear markets since 1990 if they did not rebalance their portfolios.
Let's see an example.
Michelle
age
54
Occupation
25 years in Accounting at Major Oil Company
Michelle felt like an expert investor because she held half of her 401k assets in her company stock, one of the industry’s leaders. Only after the share price dropped 50% in 2015, forcing her to delay her retirement, did she realize her error.
Emotional investing is at the heart of these behaviors
Familiarity
I know more about how my industry's stocks will perform the others.
Gamber's Fallacy
Stocks have fallen ten days in a row. They should go up tomorrow to "revert to the mean".
Herd Mentality
If everyone else is buying, then it must be the right thing to do.
Representativeness
All I see is all there is.
Financial Advisors can help!
Like a coach helps an athlete reach peak performance, a qualified financial advisor can
help you make better, more confident decisions with your money.
Research shows that families working with professional advisors...
Have a higher net worth
Stay on budget and save more
Feel more ready to meet financial challenges
Make fewer financial decisions based on emotion
Aren't financial advisors expensive though?
Actually, the cost is small relative to the benefits you receive. Investors who use an advisor historically have an average annual return that’s 3.4% higher AFTER the fees they pay. That difference adds up over time.
= $5,000
= $1,000
After Year
1
$100,000
$100,000
By comparison, an average family with $100,000 in investments who hires an advisor pays about $1,530 each year.
= $5,000
= $1,000
After Year
10
$160,060
$261,060
By comparison, an average family with $100,000 in investments who hires an advisor pays about $1,530 each year.
= $5,000
= $1,000
After Year
20
$242,035
$441,130
By comparison, an average family with $100,000 in investments who hires an advisor pays about $1,530 each year.
How do you find a qualified advisor? Let Wealthminder help you.
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