Why is Financial Independence so Hard?

National News
Reading Time: 5 minutes

By Aleksander Cupi, Special for USADT

Greed, deceit and exploitation have existed for thousands of years and nobody has mastered them better than Wall Street. Because investing is a zero-sum game than it is obvious that Wall Street bullies would “advise” the average investor to do what suits them which is detrimental to the investor’s returns. The average American is at a big disadvantage fighting the bullies on Wall Street, keeping them away from their hard -earned money and investing it successfully for the long term for their own benefit is a real challenge. When 45% of American households do not have $400 the stakes couldn’t be any higher. Millions of people will never be able to retire, millions of families will be financially devastated unless the average American investor finds the courage to break the shackles of Wall Street and take control of their financial destiny.

A brief history of the problem.

The Wall Street propaganda machine has for a long-time made the average investor react to politics, news, economic cycles and other developments which are not in their best interest. The naïve investors have rigorously followed with chasing returns, the next big thing, using leverage, timing the market and panicking by speculating with their hard-earned money and day trading which results in very fat commissions for Wall Street firms.

Billions of dollars are spent every year to keep the propaganda machine running on all cylinders. Unfortunately, a lot of people fall for its propaganda thinking they are getting the right advice being unaware of Wall Street intentions and conflicting interests. Every time a security is bought and sold there are trading costs involved and the only one who benefits from such activity is the trading firms. Even in cases when there is a gain from trading and they usually are short term than such profits are taxed at 35%.

Historically the market has averaged about 10% since the Great Depression which is great, but a lot of investors have not been able to even achieve half that because of their own mistakes and “wisdom” of Wall Street. Several studies have been done on short term trading and have found that for a trader to match the returns of the buy and hold investor after trading costs and taxes on short term capital gains would have to be 18%.

The average American investor has paid dearly for their own mistakes by jumping in and out of investments and blindly following Wall Street. There was a study done by JP Morgan Asset Management on how individual investors fared during a 20-year period from January 1996 to December 2015. The study concluded that the individual investors achieved a return of 2.1% versus the markets return of 8.2%. So, $100 k invested in the market grew to $489k while the individual investor’s 100k grew to a mere $160k. At 2.1% the individual investor did not even beat inflation that run at 2.2% during that period an ugly underperformance of 74% annually.

Some great reads on the subject for those interested I recommend are “The Money Game” by Adam Smith and “Where are the Customer’s Yachts” by Fred Schwed Jr.



The Financial field is a real cesspool.

It is indeed very complicated and hard for the average investor to keep a clear mind and focus on their investment goals, income needs, risk tolerance and investment horizon when bombarded daily with nonsense and irrelevant information. Wall Street does a great job at creating this financial fog, contemplating lie after lie to sell its products, confusing the average investor and destroying any chance of investment success. Here are a few of the problems that I see standing in the way of Financial Freedom for the average investor.

  • A lot of “professionals” in the Financial arena following “conventional wisdom” and applying a “cookie cutter approach” to investing and Financial Planning. General maxims such as if you’re 60 years old you should have 60% stocks; 40% bonds are not sound strategies when planning for retirement. Asset allocation should be tailored to individual’s income needs, investment objective, risk tolerance and time horizon.


  • About $13 trillion is managed by Mutual Funds, putting money in Mutual Funds is a losing strategy because about 85% of Mutual Funds underperform the market by 2-3% annually. A 3% underperformance coupled with high management fees, short term capital taxes at 35% and a high turnover of 300-400 % make Mutual Funds an unsuitable vehicle for long term investing success.


  • A lot of people are invested in Mutual Funds through a “middleman” who take a cut and add to expenses. “Advisors” who wing it take a percentage and outsource to other firms or Mutual Funds. After everybody has taken a cut the investor is lucky to average 5-6% annually. Mutual Funds investors will be hugely disappointed when it’s time to tap into their investments as there will be less than they anticipated, $10 K invested over 30 years in the S&P 500 will grow to about $160,000 versus $60,000 in Mutual Funds. So, someone who had a goal of retiring with $ 1 million will have around $400,000.


  • The number of Mutual Funds, ETF’s outnumber publicly traded companies and adds to the confusion, making investing more complicated, is misleading as investors are not diversified due to overlaps.



  • Not being in the right investment vehicles to match their investment objectives, a lot of people are loaded with insurance products because they are sold by people with well-crafted sales pitches, are too complicated and come with a lot of stipulations. Why risk your money in the stock market when you can have a guaranteed vehicle? These insurance products are sold as safe when they’re not as is the case of indexed or variable products that are tied to an index.




Where to look for solutions?


As with anything else in life investing is a risk reward game that when played right by being focused on the game rather than staring at the scoreboard can be won. Financial independence is achieved by only those who play the long-term game of investing, who focus on their goals, understand that it is a marathon not a sprint, have a solid financial plan in place and stick with it through thick and thin.


I have been lucky to have studied the legendary investors Benjamin Graham, Warren Buffett, John Templeton, Walter Schloss, Philip Fisher and Peter Lynch for the last 13 years and have learnt what works and what does not in investing. These legendary investors have been kind enough to share with us their wisdom and for anyone aiming for financial security should read as much as they can from them. In my opinion it is the only way, the legendary investors have been so successful because they played the game of investing in their own terms, not on Wall Street’s terms.



As Albert Einstein said “Everything should be made as simple as possible, but not simpler” here is               a summary,

  • live below your means.
  • start investing early.
  • ignore Wall Street.
  • Have a financial plan
  • Stay the course.


Aleksander Cupi,

Financial Advisor. Personal, Business & Family


Lifetime Investments & Insurance

11811 N Tatum Blvd, Suite 3031

Phoenix, Az 85028

Phone:  602-953-7822

Fax:       602-953-7741

E-mail:  alex@lifetimeinvins.com

Web:     https://www.lifetimeinvins.com/


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