The Single Investment That You Have the Most Control Over Is the Savings Rate.
Investment is inherently volatile. Whether you invest in stocks, bonds, or index funds, there is always a risk that you will not get back what you hoped for. There is one thing you can 100% control: your savings rate.
You have as much control over how much you save as over your own budget. Which, I must admit, can not always be a lot . Financial advisers do not in vain recommend saving as soon as possible, often and as much as possible: you can never return as much as you could if you save more. As the personal finance blog Mom and Dad Money explains:
In truth, all this focus on return is a lot of ado about nothing. Because in the first DECADE of your investment life, the profit you make, good or bad, hardly matters. There is only one thing that really matters, and the good news is that this is the only thing that you have complete control over. Your savings rate.
Just read any article on compound interest and you will see how, while long-term profit is important, it can take years before it becomes important. In the decade leading up to this, the best way to maximize your investment is not to choose the right index funds. The best thing you can do is save more. Even if it’s only a few dollars a month, it’s better than nothing.
Your Investment Plan Means Nothing If You Don’t | Money for Mom and Dad through Rockstar Finance