No strategy can make up for inadequate savings or premature retirement.—-Rob Arnott, Research Affiliates
I like this quote a lot. It gets at some of the factors that allow clients to achieve wealth, along with intelligent investment management.
- Savings, and
- Time.
Savings is usually more important than investment strategy, especially when a client is just beginning to accumulate capital. Without some savings to begin with, there’s no capital to manage.
Time is important to allow compounding to occur. This is often lost on young investors, who sometimes do not realize what a jump they will get by starting a portfolio early. How many of us in the industry have met with the 55-year-old client who has just finished putting the kids through college and is now ready to start saving for retirement—only to realize they will need to save 115% of their current income to reach the retirement goal they have in mind? Oops.
Save early and often, and give your capital lots of time to grow.
