We’re constantly communicating with investors who develop ideas and opinions about the stock market. We truly understand their angst. We too struggle to make the best decisions without personal funds. With all the uncertainty that surrounds the market, we decided to put together a list of 24 of the most interesting investing statistics we think you need to know before diving in.
Just about every day we hear how bad finances are in this country. Unfortunately, we tend to be apathetic and to accept those statistics. So it’s important to learn all we can about finances to drown out the excess noise. On the opposite end of the spectrum, some tend to discredit the stats altogether. However, both attitudes are dangerous.
Interesting Investing Statistics
- If you do not start saving until 45, you will need to save three times as much as if you start at 25.
- 90% of actively managed funds underperformed passive funds
- 0.75% in fees equates to a 20% smaller nest egg in just 30 years
- On average, women invest more conservatively than men. Over the long run, this can result in lower returns and more of a risk of your assets not keeping pace with inflation.
- A long-term asset return study by Deutsche Bank stated the last time interest rates were near current levels (the 1950s), Treasury Bonds lost 40% of their inflation-adjusted value over the following three decades.
- In August 2000, Fortune magazine published “10 Stocks to last the decade". By December 2012, a portfolio containing those 10 stocks lost 74.3% of its value.
- All economists agree that predicting a stock’s price is tough. However, only 59% of Americans agree with that statement.
- Women, on average, earn 78% of what men bring home, resulting in a $250,0000 average lifetime earnings differential.
- 40% of stocks fell at least 70% since 1980. That’s considered “catastrophic losses” and they never recovered.
- Vanguard reported that of all the mutual funds benchmarked to the S&P 500, 72% underperformed the index over a 20-year period which ended in 2010. The phrase “professional investor” is certainly a loose one when looked at through the lens of the history of stocks.
- Most people expect to have their mortgage paid off by the age of 75. However, 21% of Americans still carry a mortgage debt at that age.
- The average retirement account generates less than $400 per month for income in the “Golden Years”.
- Between 1928 and 2013, a broad index of US stocks increased 2,000-fold. However, 20 times they actually lost at least 20% of their value in that period. Volatility wouldn’t create as much fear if everyone realized how common it is.
- As of January 2013, 16 people born in the 1800s were still alive, according to a research group. With dividends reinvested, US stocks have increased 28,000-fold during their lifetimes.
- When asked how much they saved for retirement, 53% of American workers answered less than $25,000 (excluding the value of their home). With 35% stating, they saved less than $1,000.
- The average investor, over a 20-year span ending in 2015, underperformed the S&P 500 by 6%. Over that period, the return was slightly less than inflation.
- Women are more likely to work in part-time jobs that do not qualify for a retirement plan. In 2009, 24% of employed women (aged 20 and older) worked part-time, compared to 11 % of men.
- The US entitlement retirement program, Social Security, is based on earnings made in one’s lifetime. In general, women make less money than their male counterparts, but they also typically leave the workforce for about 12 years. That absence is usually attributed to caring for children or other relatives; therefore reducing their Social Security benefits upon retirement.
- Divorce happens, but is most likely to take place in the first seven years. That means your ex can’t claim spousal Social Security Benefits. According to the law, you must be married ten years to qualify for those benefits.
- The greatest returns seem to be when most people expect the biggest losses. Wanna know the single best three-year period of owning stocks? Turns out it was during the Great Depression. The next best returns, the three years starting in 2009, when the economy struggled in utter ruin.
- Parents, at least 61% of them, prefer discussing investments with their advisors than their adult children.
- Hedge-fund managers underperformed over the past ten years. That’s not just in the stock market but includes inflation as well.
- Stocks rose 1,100-fold over the past 70 years.
- Most active traders garner the lowest returns. Between 1992 and 2006, 80% of active traders lost money, and only 1% of them were profitable.
The take away from all these numbers is some of these approaches can be costly! Don’t make the mistake of not learning from the mistakes of others. Before we start any investment, it’s crucial to get acquainted with the market and understand how these investment stats apply to you. An even better plan is to leave the statistics to the pros. The volatility can hinder your ability to effectively invest because of what we call “investor emotion”. It is too easy to make decisions based on a hunch or fear that something is “about to happen soon”. This perfectly natural human emotion can be harmful to your long-term financial well being.