Stock market returns from mutual fund investments fail to be lucrative

If you’re a typical investor today, now holding 70-100% of your invested capital in the stock market, then you’ve got nerves of steel or total blinders on or both. I admit the seemingly endless upward climb of the market does light up the “easy money” greed button in most of us that's hard to resist.

But, in your gut, you may also have a growing anxiety that most of these gains are not based on anything real in terms of business fundamentals; rather, they're driven by media hype, emotional sentiment, and Fed buying behind the scenes. That’s a recipe for a house of cards that can topple on a whim, as we often experience when corrections occur.

You see, often things that seem alluring and lucrative on the surface are something altogether different when you take a closer look. Like a poorly laid foundation, the tell is in the cracks and crevices (in this case, in the spreadsheets). So, let’s get out our magnifying glass and take a close-up look at stock market investing reality through real data charts.


According to average stock market returns over the past 15 years, if you invested $100k in 2004, it would’ve been worth $277,454 in 2018. So, despite the 2008 mortgage defaults-triggered financial crisis that resulted in a 40% drop in the stock market, IF you didn’t panic and held on through the down cycle, you’ve been able to ride the wave back up and dodge financial ruin. Not bad, eh?

Ok, let’s get out that magnifying glass and have a closer look at the reality of this simple math… 

As calculated in the chart above, most investors don’t realize that their original $100k (at bottom left of the chart) wasn’t actually worth $277,454 fifteen years later. When we walk through the math in detail, we see it was only worth $255,425 in 2018, for a true return of 5.6% compounded annually.

Why? Because the inherent and unpredictable swings of the stock market from year to year – driven more by emotional sentiment than true fiscal reality – can crush your returns.

 If you think about it scientifically, like from a physics perspective, it makes sense. The wild gyrations from year to year create a lot of noise and commotion that distracts and diffuses the energy (momentum) of your money.

And I’m sorry to say…it gets worse. Instead of being worth $255,425 in 2018, that $100k gets shaved down to $193,879 for a measly 4.5% compounded return after fees.

Then, of course, ‘ole Uncle Sam tax man takes his capital gains tax bite out of your wallet too.

Yikes! You’re now down to 4% average annual return over the past 20 years. Ouch! And the worst part is the raping and pillaging is not over…because we haven’t factored in the reality of the impact of inflation. Once we add an estimated 1.6% inflation rate to your post-taxes and fees rate of 4%, your returns slip to a shocking 2.5%.


And there it is…I encourage you to carefully review these charts and take in the truth they’re telling you. For me, these are the anxiety-inducing cold, hard facts of investing predominantly in the stock market. It’s why in early 2016, I started shifting my investment focus in earnest. 

And I started with what I believe is the safest, easiest way to build your competence and confidence in more directly taking accountability for being the CEO of your family’s wealth. I self-directed my trailing 401k and IRA accounts…putting hundreds of thousands of dollars I directly control in a bank account to invest in assets I feel more confidently will produce sustaining income and wealth for me in later years.

My returns have been higher and more predictable; and my profits are hit with way less fees. By investing on this more personal level of private investments, I am able to invest in things I care about, that I am able to directly hands-on investigate with my own due diligence. In this way, my money has a more meaningful impact in the world and a more substantial impact on my personal wealth.


So, why don’t more everyday investors engage in the wealth-building strategies of owning or controlling the transformation and use of real estate? Well, the problem is three-fold:

  • You must invest with a long-term view: Investing in real estate and other hard assets is less liquid than the stock market; you generally must commit capital for a minimum of 1, up to 10+ years.
  • People falsely assume, or are led to believe, they need hundreds of thousands of dollars to get started; sadly, they never start when all they really needed was $50k.
  • Most people don’t know how to find the right real estate investment deals to invest in with proven asset operators that generate predictable returns over several years. But because we have dedicated our time to investing full-time, we’re constantly networking, meeting, vetting new asset managers with proven track records and investments deals that make sense with clear business plans and profits.

My partner Peter and I formed Global Investor Alliance to help others overcome these three problems. We love to turn other smart folks on to this way of investing because we want you in our circle of influence to keep us on our game as well.


You can apply to join us if you’re looking to collaborate with a group of like-minded, real estate-focused investors to up your investing game, sound-board your analytics, and gain buying power in syndicated investment deals by associating with a strong investor capital group like ours where you can get priority access to the best provider’s deals.


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