THREAD // Are savings or investment returns more important?
Short answer: savings in the short-term (<10 yrs) and investment returns in the long-term (>20 yrs)
Long answer: keep reading
Short answer: savings in the short-term (<10 yrs) and investment returns in the long-term (>20 yrs)
Long answer: keep reading
Starting out, investment returns won't accelerate your net worth growth much.
A 7% return on $1,000 is only $70.
A 7% return on $10,000 is only $700.
Early net worth growth is purely dependent on how much of your income you can save.
A 7% return on $1,000 is only $70.
A 7% return on $10,000 is only $700.
Early net worth growth is purely dependent on how much of your income you can save.
Ex. Amanda, who saves $20k per year but only earns 4% ann. returns will have more after 15 years than Ashley, who saves $15k per year and earns 7% ann. returns. 
Ex. Someone who invests $25k per year and earns pathetic 3% ann. returns will have roughly the same amount as someone who invests $15k per year and earns stellar 9% ann. returns after 15 years:
Investment returns are wonderful, but you can't rely on them. A high savings rate is more reliable.
The MORE you save and invest, the LESS investment returns impact how long it will take you to hit your financial goals.
The MORE you save and invest, the LESS investment returns impact how long it will take you to hit your financial goals.
Net worth growth can be annoyingly slow at first.
Over time, two factors begin to work in your favor: increasing investment returns and increasing income.
As you invest more, the amount you receive in returns will increase. As you get older, your income should increase as well.
Over time, two factors begin to work in your favor: increasing investment returns and increasing income.
As you invest more, the amount you receive in returns will increase. As you get older, your income should increase as well.
If your net worth is currently under $100k, the fastest way to increase it is through making the right lifestyle choices. Saving $300 on monthly rent puts an extra $3,600 in your pocket per year. A 7% return on a $50k investment is only $3,500.
fourpillarfreedom.com/lifestyle-choi…
fourpillarfreedom.com/lifestyle-choi…
Even if you earned 0% investment returns, if you managed to save 50% of your income each year you could have 10 TIMES your annual expenses saved up after 10 years. A high savings rate can offset poor investment returns. fourpillarfreedom.com/can-a-high-sav…
If possible, create your own investment returns through investing in:
-educational degrees
-your skill set
-side hustles
-your own small business
fourpillarfreedom.com/how-to-create-…
-educational degrees
-your skill set
-side hustles
-your own small business
fourpillarfreedom.com/how-to-create-…
Although savings tend to matter more in the short-term, investment returns tend to matter more in later years.
If you invest $10k/year and earn 7% ann. returns, it would take you 7.84 years to go from $0 to $100k but only 6.37 years to go from $600k to $1 mil. THAT'S AMAZING.
If you invest $10k/year and earn 7% ann. returns, it would take you 7.84 years to go from $0 to $100k but only 6.37 years to go from $600k to $1 mil. THAT'S AMAZING.
As your net worth grows, investment returns begin to account for more net worth growth. fourpillarfreedom.com/heres-how-much…
TAKEAWAYS: Focus on a high savings rate when starting out. Lifestyle choices matter more than investment returns. Be patient. As time goes on, increasing investment returns and an increasing income accelerate net worth growth. In later years, compound interest becomes insane.
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