How Is the Average Equity Investor Doing Compared to Myself?

How Is the Average Equity Investor Doing Compared to Myself?

July 29, 2023

Explore Arista Advice's latest insights on equity investing and how it compares to a more hands-off approach. Discover how personalized portfolios at Arista Wealth can help you achieve your unique financial goals. Gain valuable insights from anonymized data provided by a leading research firm, revealing the performance of various investor types at top investment firms. Uncover staggering statistics over different timeframes, highlighting the benefits of a long-term, low-stress investment strategy.

Find out why the average equity investor over the last 30 years achieved 6.8% compared to the 9.6% market index, and how this trend continues over 20, 10, 5, and 3-year periods. Learn how a $100,000 investment can grow significantly based on your level of engagement with your portfolio.

Discover the key to financial success – a diversified, low-cost, and low-fee investment approach. Reduce news consumption, stress, and anxiety while enjoying life to the fullest. Let your portfolio work for you and live a life of significance. 

Full transcript: 

Hello, welcome to Arista Advice! Question of the week is: "Paul, how is the average equity investor doing compared to myself?" Well, first off, all rates of return are very personalized and customized. No one client has the same portfolio at Arista Wealth. We're always customizing client's individual investments because they all have individual goals and objectives.

But we have some insight on some really cool data that comes from a research firm. Can't say their name, can't share a lot with you, but I can share you some hypothetical numbers, so we'll use the word hypothetical. They track investors of all types at some of the biggest investment firms in the country. They sanitize the data, they pull off the client's name, account numbers, addresses, and they just look at the pure economic account value data. Let me share with you and pull back the curtains. It's pretty interesting.

The average equity investor over the last 30 years has done 6.8% when the broad market index has done 9.6%. That is staggering. On a 20 year data, the average equity investor, the person who's trying to time the market, the person who reads the news and then goes and adjusts their portfolio and thinks that they know more than the market, they got a 9% rate of return when the broad market returned 9.8%. Pretty thin, but still the broad market wins. Watch this one. On a ten year, the average equity investor did 9.33% and the broad market did 12.56%. On a five year, the day trader, marketer investor, in and out, 5.1% compared to 9.42%. And on a three year, 4.05% versus a 7.66%. Let's go back to the ten year number. The ten year average equity investor did 9.33%, and the broad market did 12.56%.

Let's give each of them $100,000. The person that was always reading the news, moving their money around, thinking that they were really smart and using their money for entertainment purposes, it grew at 9.33% if they started with $100,000. Ten years later, it'd be $244,000. Catch this. The same person that looked at their account once a year, took all that extra time and went wrote a book, rode a bike, went for a walk, went and visited their friends, and got a 12.56% by looking at their account once a year and allowing the markets to perform in their favor. That hundred thousand turned into $326,000. Less emotional drag, less anxiety, less frustration, less worry, and they ended up with more money.

How, how can you beat that? Those are the important things that we need to always remember. Always remember to have a diversified portfolio, globally diversified, low costs, low fees and enjoy life. And stop reading so much news. Reduce your news intake and increase your oxygen/life intake and the market and the portfolio it will take care of you. 

Please remember to go to Aristawealth.com to get other videos, tools, tips and resources to help you live a life of significance.