As a CFP®, I'm constantly in contact with investors who develop ideas and opinions about the stock market. I understand their angst. I too struggle to make the best decisions with my personal funds (This is why I hired a financial planner for myself!). For that reason, I decided to put together a list of 24 of some the most interesting investing statistics I think you must know before diving in.
Just about every day we hear how bad finances are in this country. Unfortunately, we tend to be apathetic and just 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 stats altogether. Be careful, both of these approaches are 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. Hopefully, that will give us the power to avoid common investing mistakes.
24 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.
- About 90% of actively managed funds underperformed passive funds.
- Fees of 0.75% equates to a 30% smaller nest egg in just 20 years.
- On average, women invest more conservatively than men. Over the long run, this can result in lower returns and greater risk of your assets not keeping pace with inflation. (For related reading, see: 4 Ways Wealthy Men and Women Differ as Investors.)
- 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, the portfolio in question lost 74.3% of its value.
- All economists agree that predicting stock prices is tough. However, only 59% of Americans agree with that statement.
- Women, on average, earn 76% of what men bring home, resulting in a $250,000 average lifetime earnings differential.
- Since 1980, 40% of stocks fell at least 70%. That's considered "catastrophic loss," and many never recovered.
- Of all the mutual funds benchmarked to the S&P 500, 72% underperformed the index over a 20-year period ending in 2010. That's according to Vanguard, which makes the phrase "professional investor" a loose one.
- Most expect to have their mortgage paid off by the age of 75. However, 21% of Americans still carry 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 U.S. 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, U.S. stocks have increased 28,000-fold during their lifetimes.
- When asked how much they have saved for retirement, 53% of American workers answered less than $25,000 (excluding the value of their home), and 35% stated they have saved less than $1,000. (For related reading, see: The Average Retirement Savings by Age for 2016.)
- The average investor, over a 20-year span ending in 2015, underperformed the S&P 500 by 6% annually. 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 (age 20 and older) worked part-time, compared to 11% of men.
- The U.S. entitlement retirement program, Social Security, is based on earnings made in one’s lifetime. In general, women make less money than their male counterparts. They also typically leave the workforce for about 12 years, usually to care for children or other relatives, reducing their Social Security benefits upon retirement.
- Divorce happens, but is most likely to take place in the first seven years of marriage. That means your ex can't claim spousal Social Security benefits. According to the law, you must be married 10 years to qualify for those benefits. (For related reading, see: How Divorce Affects Social Security Benefits.)
- The greatest returns seem to be when most people expect the biggest losses. Want to 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 over their adult children.
- Hedge-fund managers underperformed over the past 10 years. That's not just in the stock market, it 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.
Disclaimer: Heritage Investors, LLC, 11470 Parkside Dr Suite 201, Knoxville, TN 37934, (865) 690-1155, is registered as an investment adviser with the State of Tennessee. Heritage Investors only transacts business in states where it is properly registered or is excluded or exempted from registration requirements.