The average investor can do better than the average investor.

I’ve got some good news and some bad news.

The good news: market returns have been generous for investors for years. Since 1987, the S&P 500 has had a return of just over 10% per year.

The bad news: the average investor has only gotten about 4% per year for the same timeframe.

To say it another way, over the last 30 years, investors could have had returns of 10% per year if they had invested in the S&P 500 for the whole time. Instead, they only got about 4%.

Let that sink in for a moment.

Over the last 30 years, the average investor underperformed the market by about 6% per year. Or, we could also say that the average investor earned 6% less than what they could have gotten.

These returns were available to anyone that wanted them, but the average investor failed to get these returns. Why?

Something called the behavior penalty. Let me explain.

In football, when the offense jumps before the ball is snapped, the ref throws the yellow flag and blows the whistle. The offense is penalized 5 yards and has to back up.

One of the basic rules of investing is to buy low and sell high. But most investors actually do the opposite due to two main reasons: Fear and Greed. When they don’t follow the rules, they get penalized.

In 2008, when a lot of average investors saw their account values go down, they got scared and believed they had to cut their losses and they pulled their money out.

Then, after the market came raging back in 2009, once these investors started to feel better about the market, they put their money back in.

What just happened here? They rode the market down until they couldn’t take it anymore and sold when the market was low. They locked in their losses.

Then, when the market came raging back, they waited until they felt safe and then reentered.

They sold low and bought high. They did just the opposite of what prudent investing says to do. And they got penalized big time!

Imagine what might have happened if their adviser kept them from this kind of bad investing behavior. Imagine if the adviser would have kept them from doing the wrong thing at the wrong time. Would they be better off today? Yes!

I don’t want this to be true of you.

I want you to be able to provide for your family, send your kids to college, and leave a legacy for your family that will live on beyond you. I want you to be able to give generously to the things you care about - your place of worship, your charities, to the world around you.

This is why I do what I do. I am a coach. I keep investors on the path towards financial peace of mind.

Do you need a coach? If so, I would love to talk to you.