Focus on what you control: Your savings rate
At the beginning of an investment journey, it can be difficult to justify setting aside part of your paycheck for a goal that may be decades away. That challenge becomes even greater when markets feel volatile and everyday expenses are rising.
But one of the most important drivers of long-term wealth is savings rate. It is the energy that fuels your financial goals.
A useful framing comes from Stoic philosophy: focus on what you can control and accept what you cannot. Investment returns fall largely outside of our control. Your savings rate, however, is almost entirely within it.
As of early 2026, the national average savings rate is around 4%. This is well below the commonly recommended range of 10–15% of income, making it difficult for the average saver to reach long-term financial goals.
To illustrate the impact, consider two individuals earning $100,000 per year. One saves the national average, 4% of their income, while the other saves 15%. We will also assume both invest those savings and earn a 7% annual return over 30 years.
Savings Rate: 4%, Annual Contribution: $4,000, Total Contributed: $120,000, Investment Gain: ~$257,843, Ending Value (30 yrs):~$377, 843
Savings Rate: 15%, Annual Contribution: $15,000, Total Contributed: $450,000, Investment Gain: ~$966,911, Ending Value (30 yrs): ~$1,416,911
The difference is substantial—over $1 million—despite both investors earning the same rate of return and having the same salary.
In the first 10–15 years of investing, portfolio growth is driven primarily by contributions, not market performance. Early on, discipline matters more than return. Over time, compounding becomes more powerful, but it needs a strong foundation to build on.
A higher savings rate doesn’t just increase your portfolio value; it can move your entire financial timeline forward by years. Giving you flexibility and freedom.
One of the best saving strategies is automation. Setting up an automatic contribution of 10% reduces friction and removes the need for ongoing decisions. The most effective way to improve your savings rate is through small, consistent changes. Increasing your savings rate by 1% each year can create a strong and sustainable foundation.
The goal is consistency and gradual improvement—focusing on what you can control and allowing time to do the rest.
The examples and projections presented are hypothetical and are provided for illustrative purposes only to demonstrate general mathematical and financial principles, including the effects of compounding and consistent investing. They do not represent actual investment results and are not intended to predict or guarantee future performance.
All rates of return used in these examples are assumed and do not reflect the performance of any specific investment, strategy, or market index. Actual investment results will vary due to market conditions, volatility, timing of contributions, fees, taxes, and other factors. Past performance is not indicative of future results.
This information should not be construed as investment advice or a recommendation to buy or sell any security. Investors should consult with a qualified financial professional before making any investment decisions.