Average portfolio (first answer)
The average portfolio is designed for people with no knowledge of finance and investment. An average portfolio has a behavior similar to the market environment, and its performance depends on the economic cycle. An average portfolio is a composite of the Dow Jones Industrial Index and the Standard and Poor's 500. From 1950, both indexes had a performance of 10% in a ten-year cycle in average. The previous is the argument that the mutual funds and agents say to the investors to have an average portfolio without financial education and "low risk" (Kiyosaki). The risk is relative according to the behavior of the market. The average portfolio will have a behavior similar to the market evolution. A crash in the stock market will destroy the value of the average portfolio of the investor, a phenomenon with a high probability of occurrence in a ten year period, for example, 2008, 2000 and 1986 were years of stock exchange collapse in indexes, Dow Jones and Standard and Poor's 500.
Average portfolio (second answer)
The average portfolio is designed for clients with no knowledge in investment and finance and with risk aversion. The best product for the average client is a combination of 401K, mutual funds and a long term saving account. The 401K allows the client to put money in a special account with differed tax payment and with a passive interest higher than a traditional saving account. The 401K has a maturity of 20 to 30 years. The mutual fund is the second product for an average investor, the fund may invest in a specific market, or economic sector and is administered by an agent or administrator which retains a fee monthly or annually. The third component of the average portfolio is a long term saving account, the long term saving account gives a higher percentage than the traditional saving account, but the interest of the saving account are taxable in the annual income statement.
Work Cited
Kiyosaki, Robert. The Difference Between an Average and a Sophisticated Investor. 18 November 2014. 29 January 2016 <http://www.richdad.com/Resources/Rich-Dad-Financial-Education-Blog/November-2014/the-difference-between-average-and-sophisticated.aspx>.
