Why Most Passive Investors Never Get Ahead

The dream is simple…

… A solid job that delivers a solid middle class with a comfortable retirement.

You’re told you can’t jump in and out of the market because you’ll miss the big moves.

So conventional wisdom suggests you put your money in an investment account, don’t touch it, and add to it over the years.

With time and the power of compounding, supposedly you’ll be fine with your pot of gold at the end of the rainbow.

Well… from the mouth of Donald Trump, “Wrong!”

Being passive leaves your money to chance and lines the pockets of professionals with fees.

How passive investing leaves you broke

The average yearly return of the S&P 500 since inception is 8%.

A rate that small isn’t good enough after you factor in inflation, fund management fees, and other expenses.

Being passive exposes you to market volatility, which is random and leaves your portfolio open to unnecessary risk.

The team over at tastytrade created some research to help put numbers behind this theory.

They created two accounts, each with a starting balance of $10,000.

Then they generated random returns over an 8 year period in Account A (shown below).table-2a

That $10,000 account had an ending balance of $11,419.

In Account B (shown below) they took those same 8 year returns, but put them in reverse order.


No matter if you timed the market in this 8 year period, the ending balances were the same.

They took it a step further.

This time they simulated a more realistic approach with contributing more early on and then taking some out towards the tail end for random expenses.

This is where unpredictable volatility becomes more apparent.

Keeping the same returns in Account A, but contributing and withdrawing money in those 8 years: (Shown below)



The ending balance was $20,268.

Keeping the same returns in Account B, but contributing and withdrawing the same way, the ending balance is $30,129.

We see a huge difference in the ending balances.


By comparing each account’s starting balance to their ending balance, Account B profits $8,629 while Account A loses $1,232.

This is what blind luck and unpredictability looks like.

By using a passive approach, you’re hoping that luck will be on your side.

Luck should never be the only factor that determines your success.

There’s a reason why Las Vegas profits and gamblers lose.

Being passive with your investments is gambling.

Being in more control of your money and investments is scary… at first.

If they do most try banking on luck, gut intuition and praying.

The only way to eliminate the gamble and randomness is with having a system that creates consistency.

It’s not about being a daytrader either, but being a little more active, strategic and educated will put you in the driver’s seat down the road to financial freedom. It’s about retiring when you want to retire.

And having enough to cover the bills when times get tough.

We’ve declared our independence.

It’s time for you to decide if you want to declare yours today.

In Fearless Investing With Options, I teach you the investing plan on how to start using options to increase your probabilities of success, reduce your risk and enhance returns.

It teaches you how to remove the fear and greed with investing so you can become a fearless, independent money making machine.

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How To Prosper With Options In Any Type Of Market To Create Wealth, Freedom & Options

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Credit: tastytrade – Volatility Hurts Passive Investing