Play Averages to Succeed at Investing? Deal!

NEW BERLIN, Ill. (MainStreet) -- You know the TV game show Deal or No Deal, right? Contestants face 26 shiny metal briefcases, each with a dollar amount inside ranging from one penny up to $1 million. At the beginning of the show, the contestant chooses one of the cases as a prize.

The amount in the case stays secret until the end of the show. Then the contestant begins eliminating the remaining 25 cases. As the cases are chosen, the amount in each is revealed. At the end of each round of "reveals," a character called "the banker" offers the contestant money to drop out of the game.

A winning strategy for the TV game show Deal or No Deal can also win in your retirement investing.

The amount the banker offers is statistically relative to the amounts that have yet to be revealed -- if more high-dollar amounts remain (which means a high-dollar amount could be in the contestant's prize case), a relatively higher amount is offered. If the amount offered is attractive enough, the contestant can choose to take that amount and quit the game. If not, the contestant will have to choose another case and reveal the amount.

As the match progresses, often we see the contestant choosing cases that reveal high dollar amounts in them, which prompts the banker's offer to reduce. Even when faced with seemingly impossible odds, when this situation occurs, the contestant often becomes a risk-taker -- more so than you would normally expect.

This is because contestants feel as if they have already lost something (the earlier offer from the banker) and somehow must "make it up" by continuing the game in spite of the odds dictating less and less that they'll be able to. Statistics will rule, and on average the contestant walks away with a much smaller prize than expected.