Set Expectations Most people in the U.S. know what place their local sports teams are in. They know what film won the last Academy Award. We live in a society that pays a lot of attention to quite a bit, but one thing we do not seem to pay much attention to is how our investments are doing compared to the market's averages. Why is that?

The reason why is that nobody ever taught us how, and because no one who is selling investment advice has had it in their best interest to show us how to account for our investment performance. Also, professional investors just do not want you to pay much attention to how they are doing. It gives them a lot of room for error. However, unless you are going to take the time to measure your results, you should not put investment dollars into anything but an index fund, a mutual fund that tracks the market, step for step.

Do not buy stocks, bonds, gold bullion, heating oil futures, or (especially) managed mutual funds. If you can afford to put money away for five years, but do not have the time to keep tabs on how you are doing, buy an index fund and leave it at that.

We suspect, though, that many of you have more than an hour a year to devote to this, are interested, and would not mind aiming to be better than average if it were possible. You should know that accounting for your savings, just like a business would, does not take much. Also, it not beyond your abilities to beat the stock market over time. One of today's great travesties is that most people do not consider their personal finances a business and do not think the market can be deciphered, let alone beaten.

Let's start with some basic expectations... and again, this is for the money that you can afford to put away for five years (ideally more).

Would it surprise you to hear that more than three-quarters of the equity mutual funds that are thrown at us from brokerage houses, banks, and insurance agencies perform worse than average each year? At first, it is shocking to think that the achievements of paid professionals are so significantly shy of mediocre. But on second consideration, those numbers shouldn't come as any surprise at all. Managed mutual funds charge their investors average annual fees of 1.5%, mostly to "fund" their active and national marketing plans. That's 1.5% of the total assets in your account, not just the "earnings" (if there are any).

Here is our solution to baseline accountability: Any money that you have to invest for five years or longer should not underperform the market over that five-year period. If it does, you have blundered, because you can get average market performance out of an index fund without doing any research and without taking on significant risk.

Stick close to those expectations, prepare and aim to beat them, and know why you have or have not.