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What Is The Law Of Averages?

Just who is your average investor? We all hear about this person each time we turn on the television, tune in the radio, or read a publication and discover someone offering financial advice to the masses. You usually hear about the average investor in relation to the hot topics of the moment, such as:
  • When should the average investor sell a stock?
  • What fund should the average investor own in the new millennium?
  • How will the new tax laws affect the average investor?
  • Will the average investor benefit from a Roth IRA?
  • How does the average investor determine his/her risk tolerance?
But nobody tells you if they’re talking about:
  • the average newly married couple
  • the average family with young kids
  • the average empty-nester
  • the average young, single, working person
  • the average business owner
  • the average retiree
  • the average single parent

By following advice targeted to the average investor—who doesn’t exist—you are more likely to end up with average results.

Sure, life would become a whole lot easier to manage if we were able to boil things down to the lowest common denominator.

But your unique circumstances, goals, priorities, time horizons, and personality define what will work for you when compared to the generalizations often served up on television, on radio, or in publications.