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.

What is a financial coach? Why coaching?

It doesn’t matter if our goal is to lose weight, see personal growth or to get our personal finances in order. When it comes to pursuing our goals, I have found that we have two huge disconnects that prevent us from succeeding.

This is the first disconnect: there is too much information out there for us to get a good handle on our finances.

We have no shortage of information readily available to us. The problem is that there is so much it is very difficult to sift through it all. What information is relevant to me? Is it fact or fiction? Is it academically sound or opinion with no proof?

This is information overload. This is paralysis by analysis. There is so much information that we end up not taking any action at all.

Why is this significant for financial coaching?

Since we are overwhelmed, we decide that doing nothing is better than doing the wrong thing.

But doing nothing is not always the best thing.

For years, the solution to this problem has been to get a financial planner or advisor. The planner gives us a plan and a course of action and says, “Here it is! Go do it!”

Then, we take it home. We put it on a shelf. We may even do some of the recommendations. But, eventually we forget about it, and carry on with our lives.

This leads me to the second disconnect: Even when we know the right thing to do, we have a hard time actually doing it.

If I want to lose 30 lbs before Christmas, I must eat less and move more. But, I can tell you from personal experience that I am not good at doing this on my own. In fact, if I’m honest, I simply cannot do it on my own.

To do this, I need accountability. I need a fitness coach. This is what would keep me on track and help me reach my goal.

Financial coaching is this same idea, applied to our personal finances and investing. A plan does need to be made, steps do need to be drawn out, and we need to take action.

This is where I come in. I am a financial coach who can help you pursue your American Dream. I can help you draw up a lifelong game plan. I can help you build a portfolio personally tailored to you.

More importantly, I am a financial coach who will check in with you, walk with you, encourage you, and help keep you on track towards your goals and dreams. If you are someone who needs this kind of a financial planner or investment advisor, let’s talk.

Welcome to an Investor Crash Course!

This is the beginning of a new blog for investors about investing, rescuing your American Dream, and leaving the legacy you want for your family.

We will talk about issues such as investor behavior, prudent ways to invest, portfolio structure, the importance of money and its true purpose for you, and other items that can help you on your path towards financial peace of mind.

If any of these posts spark an interest and you would like to speak with a financial coach, please contact us through this website. We hope to hear from you soon!