Welcome to Wealthy Enough - my weekly newsletter where I share actionable insights to build your life of Enough.

Most beginner investors spend an unrealistic amount of time thinking about investment returns and the “Best” investment and not nearly enough thinking about savings rate, and this is understandable (i was a beginner a decade-and-half ago). Returns feel like the variable you can win … You can research funds, adjust your allocation, read about strategy, and that’s pretty much it.

Savings rate feels boring. You earn what you earn and spend what you have to spend.

But early in the wealth-building journey, savings rate has more impact on your net worth than investment returns do.

The math is straightforward. If you have $10,000 invested and your annual return improves by 1 percent, you gain $100. If you find a way to save an additional $2,000 that year, you gain $2,000. The savings decision is twenty times more impactful than the return decision at that small portfolio size.

This inverts as the portfolio grows. With $500,000 invested, a 1 percent improvement in annual returns generates $5,000. The additional $2,000 in savings is now the smaller variable. The machine has grown large enough that what it earns matters more than what you add to it.

So it’s very important in the early years of building wealth, the highest-leverage decisions are about income and spending. Getting the raise. Taking the better-paying job. Cutting the expenses that don't add real value to your life.

Choosing between two nearly identical low-cost index funds, on a $50,000 portfolio, is not the decision that moves the needle. What you earn and what you save does.

In the later years, the leverage shifts. The portfolio is large enough that its behaviour matters enormously, and the behavioural discipline to leave it alone during volatile markets becomes the critical skill.

We often want to hear about the sophisticated part while ignoring the boring part. But honestly, for someone with a portfolio under $100,000, the highest-impact financial decision is almost always about savings rate. What goes in still matters more than what it earns.

So I hope you’ll focus on the savings side of the equation when you are starting.

Here is a quick video on how I manage my Money (and the Tool I use to Track everything: Expenses, Debt Management, Savings, Net-worth; basically everything from a Personal Finance Stand point)

If you’re interested in just tracking your expenses in a more ‘old-school’ way (paper-based) you might be interested in this one:

Keeping everything in mind, I’ve created few Money Tools and now you can have all of them for a 30% Discount from my Etsy Store: Digital Clarity Space

That’s all for this week. I hope you’ve found this helpful and insightful.

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I’ll see you next week 🙂

Saeem Khan
Creator of Wealthy Enough.
Software Engineer, Investor, Content Creator
www.saeemkhan.com