Your Portfolio Doesn't Have To Do Half The Things Wall Street Says It Does

Just 52% of Americans said they are invested in the stock market. That's the lowest rate since 1998 and 13% lower than the pre-recession high in 2007, BlackRock notes.

We all know what happened to the 1% of investors who got spooked during the recession and pulled their funds out of the market (hint: it wasn't great).

But we can't entirely blame the lapse in confidence in the market on the recession alone. Cullen Roche, founder of Orcam Financial Group, LLC, offers up another interesting conclusion: It's more of a lapse in education. People aren't investing because they just don't understand the point.

Obviously, if you've signed up for a newsletter called "Smart Investor," chances are you get the point of saving.

But we take for granted the fact that every consumer understands the rules of inflation –– that our cash only loses purchasing power over time, and that "investing" it in a variety of assets with growth potential simply is a way of protecting it. People get too caught up thinking that investing means day trading on your lunch break, trying to beat the market, or doing whatever those "Wall Street types" do in the movies. It's that reputation that isolates regular consumers and makes them insecure in their ability to get in the game.

Here's the reality: You don't have to beat the market. You don't have to be the next Warren Buffet or even know who Warren Buffet is, for that matter. There are people simply pumping money into their 401(k)s every pay period who are "winning the game" every day and don't even know it.

"In fact, [your investment portfolio] doesn’t have to do half of the things that Wall Street says it needs to do," Roche writes. "But it really does need to keep pace with purchasing power or you’re falling behind just by doing nothing or misunderstand this most basic point. And it’s easier than you think. I spend most of my time these days teaching people how to build these types of portfolios and training them to feel comfortable doing it on their own. But you have to want to do it or you’re destined to a world of guaranteed 3.5% losses on your savings."