Ep 66: Proper Investment Expectations & Standard Deviation

2021-02-11

If your head is in the freezer and your feet in the oven, on average you may feel quite comfortable despite suffering from two extremes. San Diego type weather on the other hand will leave you consistently comfortable over time. Averages are commonly used to discuss investment returns, but they are an oversimplification. You don't receive average returns. Compound returns drive your dollar growth and the variability in returns -- or standard deviation -- causes the compound return to always be less than the average return. Listen to...

Averages are commonly used to discuss investment returns, but they are an oversimplification. You don't receive average returns. Compound returns drive your dollar growth and the variability in returns -- or standard deviation -- causes the compound return to always be less than the average return.

Listen to Kevin discuss this core building-block concept and how it relates to your investments, risk, diversification, and retirement planning success. You may hear the geek alert on this episode, but having an understanding of standard deviation can help you be a better, more disciplined investor and put the odds of retirement success more in your favor.

Timestamps:

3:54 - Re-Cap On Topics From Episode 65

6:28 - Bell Curve

10:49 - Health Analogy

15:00 - Proper Expectations

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True Wealth Design Website: http://www.truewealthdesign.com/

Call: 855-893-7526

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