How Much Does The Average Person Make In Stocks

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 10 minute read

Investors and traders alike are often talking about the stock market. It is the primary source of funding for many of the world’s most consequential innovations, processes, and corporations. Many plans for retirement rely heavily on stock market investment. 

When a subject receives a lot of attention, rumors and false information circulate. The stock market follows the same pattern.

Some myths are interesting to investigate and even innocuous, but others can have serious consequences. The idea that investing is too complicated for the typical person is an example of the latter kind of misconception.

The majority of students don’t receive any stock market education until they’re in high school. In a perfect world, a high school student would participate in a stock market simulation and learn the basics of investing in stocks. 

Like most people, you probably don’t know much about financial markets as you enter college or a career straight out of high school.

People are more likely to accept novel information when they lack the context of prior knowledge to evaluate its veracity. This has been the case for innumerable would-be investors throughout history who have been discouraged by the widespread belief that investing is beyond the capabilities of the common individual.

This misconception has caused some to put off entering the market, robbing them of the compound gains that would have made their retirement years more comfortable. As a matter of fact, this is a harmful fallacy that could force you to keep working past your retirement age.

What Source Did the Myth Have?

It is a common misconception that the average person cannot successfully invest their money. Whence then did this urban legend originate? Insufficient schooling is the root cause. 

Most people lack adequate knowledge of the stock market because they have not been exposed to it in a formal educational setting. For those who haven’t been exposed to the world of investing before, the language and figures involved can be intimidating.

Moreover, in a business and competitive environment like that found on Wall Street, the average American observes men wearing expensive three-piece suits. The greatest watches, vehicles, and footwear can be found, including Rolexes and Maseratis. The financial elite of the globe is portrayed as they really are on Wall Street.

You have been taught from a young age that wealth creation is a labor-intensive process. People that make a lot of money supposedly have some sort of unique talent. Because of this, neurosurgeons and astronauts command high salaries.

As a result, it’s understandable to think that the average person has no business trying to invest. Although this assumption is incorrect, it is understandable that many people hold the view that the average person lacks the skills and drive to succeed financially in the marketplace.

Evidence that the Myth is False

There are innumerable examples of how an ordinary person rose from poverty to wealth by investing in the stock market. 

Some instances are listed below:

1. Sylvia Bloom

At the legal firm where she worked, Sylvia Bloom was a secretary. She was quite low-income and, like most locals, commuted to work through public transportation. During her time in the office, she was able to keep her financial activities a secret. 

Bloom was a secretary for quite a while, but she used that time to invest and create wealth. She stayed with the same law company for the duration, clocking in at the same office for the past 67 years.

No one, not even her closest relatives and friends, expected Bloom to leave much behind when she went away. 

Still, she saw a significant return on her investments. Sylvia had her money stashed away in eleven different banks and three different brokerages. She invested her secretarial salary and ended up with nearly $9 million, of which she left $8.2 million to charity.

2. Ronald Read

Ronald Read had to find a way to support himself once his service in WWII ended. He did this by accepting low-paying jobs like that of a gas station clerk and a janitor. Every morning at the local hospital, he had an English muffin with peanut butter and a cup of coffee.

The majority of reading’s $9 million wealth was donated after his death in 2014, including $4.8 million to the hospital where he ate breakfast every morning and $1.2 million to his local library.

So how can a janitor who makes minimum wage become a billionaire? Read spent his time away from the office studying the economy. 

His knowledge informed his investment decisions, and he made the most of his paychecks to grow his wealth. His investments double his extremely meager pay, propelling him into the upper echelons of the United States’ top 10% wealthiest individuals.

3. Grace Groner

In 1931, Grace Groner began working at Abbott Labs as a secretary. After waiting three years, she invested only $180 in three shares of Abbott Labs stock at $60 per share.

She let them grow over the course of her life, reinvesting dividends to acquire further shares of Abbott Labs common stock. Groner had 100,000 shares of Abbott Labs stock when she passed away at the age of 100. 

Stock worth nearly $7 million was generated from an initial investment of $180 over a period of 75 years. The increase in outstanding shares was the result of many stock splits, dividend reinvestment, and the stock’s overall appreciation in value.

Lake Forest College will be receiving the bulk of her estate. Although Groner never touched a dollar of the money she made from her investments with Abbott Labs, she was able to help over 1,300 kids afford higher education.

The Dangerousness of This Myth

This is not one of the myths that can be laughed off as harmless. Those who buy into the common misconception that investing is too complicated for them are setting themselves up for a world of hurt.

The stock market is not a place to get rich quickly. All of the aforementioned tales of ordinary individuals becoming millionaires as a result of their investments are examples of people who gave their money time to grow over the course of several decades. That repeated idea isn’t random.

In the stock market, compound growth is the primary force behind the accumulation of wealth. This is the result of having your money earn money. That capital is put to work again, increasing your earnings potential even further.

Shark Tank’s In an episode, Mr. Wonderful said that he imagines his investments as tiny troops fighting for a greater goal. The objective of the conflict is to enter an investment and return with as many hostages (dollars) as possible so that they can be used to purchase more toy troops. 

From there, he sends out his initial men and hostages to cover additional ground and bring back even more captives. The fact remains that investment returns typically take time to accumulate. 

More time means more opportunity for compound gains, which in turn means more of what Mr. Wonderful dubs little soldiers. Earnings that compound over time have a tremendous impact. 

To give you an idea of how potent this force is, consider that waiting even five years to enter the market can result in a loss of tens of thousands of dollars over the life of your investment.

As a matter of fact, you can invest a total of $36,000 with as little as $100 initially and $100 added monthly for 30 years. Over the course of 30 years, $36,000 might become $218,498 if you invested it in the stock market and earned average returns. 

Five years of waiting would reduce that investment to $129,396. So, putting off even a moderate investment plan by just five years might cost you approximately $90,000.

Simple Investment Methods for the Average Person

The stock market may appear daunting and complicated when first seen. As you learn more, you’ll find that there are several low-stakes entry points into the market that even those with little experience may use.


If you don’t know the first thing about investing, you can still get started with the help of a Robo-advisor. Betterment, Acorns, and Stash are three of the many available choices.

These sites make it easy to put money to work. You can just sign up, put money in, and see it grow. Robo-advisors place your money in their diverse portfolios once you’ve made a deposit.

With a Robo-advisor handling your investments, you won’t have to do any legwork or monitor yourself. You need just make an initial cash deposit and then sit back and let the algorithm decide how best to put your money to work.

Affordable Index Funds

As one of the most prosperous investors ever, Warren Buffet has long advocated for the use of low-cost index funds. In fact, he was allegedly said to have said, A low-cost index fund is the most rational equity investment for the large majority of investors. 

Know-nothing investors can beat the majority of financial advisors by simply buying and holding an index fund. Index funds are mutual funds or ETFs that seek to track the performance of a specific index, rather than individual stocks or bonds. 

Shares of an S&P 500 index fund, for instance, provide its owners a little stake in each of the 500 stocks that make up the index, with each stock receiving a weighting that is roughly equivalent to the index’s overall weighting.

Investors can receive exposure to the market as a whole with this diversified strategy, rather than having to research and select individual stocks.

Attend the Retirement Plan Offered by Your Employer

While retirement plans are typically offered only by large companies, this does not rule out the possibility of receiving such a benefit from a smaller firm. In reality, more than half of small and medium-sized businesses in the United States offer retirement benefits, per a Pew Research Center study.

The majority of these plans provide participants with a 401(k) or another tax-advantaged account into which they can direct a certain portion of their salary. A common practice is for companies to double employee contributions up to a specific point. 

Your company may, for instance, double or even triple your 6% contribution. Put another way, if you put away 6% of your pay into your retirement plan, your company will put away another 6%, for a combined 12% of your earnings, into your investing account.

To protect your financial future, you should participate in any retirement plan your employer provides. These strategies provide for easy entry into the marketplace. You can passively outperform the market by contributing as much as your company will match your salary, if not more.

Resources to Assist You in Becoming a Successful Investor

Whether you’re looking to start investing but want more hands-on management of your portfolio than a Robo-advisor, index fund, or workplace retirement plan can provide, there are a variety of resources available to help you achieve your goals. 

Examples of great no-cost resources are:

Investing Archives at Money Crashers

If you’re looking for more articles to help you become a better investor, be sure to peruse our past content. Every day, we add to the hundreds of articles, suggestions, and mini-courses we’ve already created to help you learn everything you can about growing your wealth.

The Investing Classroom at Morningstar

When it comes to investing and financial advice, Morningstar is widely regarded as a top name in the industry. There are a number of investment services available from this firm, such as market analysis and a portfolio manager to keep tabs on your holdings and stock recommendations. 

Morningstar has also put a lot of resources into creating educational content for new investors to help them learn the ropes and become successful.

Morningstar Investing Classroom is the official name of their school for financial education. Many helpful guides covering both the basics of investing and more advanced strategies are available there.

You must sign up for Morningstar in order to have access to the classroom, but you are under no need to make a financial commitment to the firm. To gain access to the company’s training resources, all you need to do is submit your name and email address.

E*Trade’s Knowledge

When all is said and done, E*Trade is a leading online cheap stock broker in the United States. The firm is well-known for meeting the needs of experienced stock traders at significantly lower prices than those of conventional brokers. 

In any case, it’s stocked with helpful features that both new and experienced traders can appreciate. Knowledge is a dedicated area of the E*Trade website aimed at educating and empowering both new and experienced traders. 

Several teachings are presented here, broadly falling into four types:

  1. Fundamentals of Investing. Outside of Robo-advisors, index funds, and managed retirement plans, everything you need to know to make your first investment is covered in the Investing Basics section. In this section, you’ll learn the fundamentals of investing and the skills you’ll need to be successful in the market.
  2. Trade with a High Degree of Complexity. Every once in a while, a story will come out about a day trader who managed to make a fortune with absolutely no investment experience. Even though it’s conceivable, day trading is a very high-risk endeavor. Having the right education and experience is crucial to doing well. You can find a wealth of resources for learning how to trade like an expert with E*Trade. A lot of work is being put into these classes. You should therefore finish the beginner tutorials before moving on to the more advanced material in the advanced trading section.
  3. Organizing for Old Age. Financially, planning for retirement is essential. At first, the thought of saving for retirement may seem overwhelming. With the help of the easy-to-understand guides provided by E*Trade Retirement Planning, you may improve your retirement savings by using the stock market’s potential returns.
  4. Strategy for minimizing one’s tax burden. Finally, investment income is subject to taxation. Capital gains taxes apply to this kind of earnings. Your investment returns will be taxed in various ways, depending on the assets you choose and the length of time you hold them before selling. You may find a wealth of resources for minimizing your tax liability as an investor at E*Trade’s Tax Planning section of their Knowledge website.

Bottom Line

Here, the truth is easily discernible. Putting money aside for a rainy day is not rocket science. Day trading is challenging, but investing for the future is as easy as putting money aside and putting it into the market.

Since there are several entry points into the market, a novice with limited market expertise can’t afford to ignore investment opportunities. The idea that investing is too complicated for the average investor delays many people’s entry into the market, which could cost them tens of thousands of dollars.

Therefore, you should not trust this urban legend. Start establishing a strategy right now if you haven’t started investing yet. Waiting gives you more time to benefit from compound interest.

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