Savings Rate vs. Compound Rate

Savings Rate – The Most Important Variable to Wealth Building, With the Math to Prove it

Gen Y Finance Guy Financial Analysis, Financial Freedom 38 Comments

When it comes to wealth building, there are many variables to consider: the power of compounding is amazing, but it takes a long time to realize its true power. Income earning is certainly important, and so is its sister, annual income growth. Taxes paid matter. Time in the market is important, too, of course. Investment returns, which are the glittery objects that many people focus lots of energy on, do matter, despite the fact that you have absolutely no control over them. And then there’s how much you save. But which variable matters most? As I have stated in my monthly financial reports many times, it’s the rate of savings that doesn’t get the attention it deserves. This is especially true in …