Saving vs Investing for Retirement : Which is more important ?
Saving vs Investing :
The verdict :
- . Assuming 7 % p.a over 30 years
- Investors A save $10K per year ( for 1st 10 years ) and $15 K, $20K in following 20th and 30th years of investing
- While Investor B save only half of the amount of Investor A, which is $5 K, $7.5K and $10K for every 10 years of investing journey.
- At the end of the 30th years, Investor B only be able to achieve 33.3% of the total of Investor A.
Net worth is an incomplete measurement of total financial worth as a living person, however. Human capital, your ability to increase your net worth in the future, is a bit harder to nail down, but it is an important factor to consider.
Below from Investopedia on 6 Ways to Boost your Human Capital
If you think you are not a " good investors " and would not be able to " beat the market ", then you may consider increasing your "saving rate" and dollar cost your investment into Index Fund (if your Risk tolerance is much lower and would like to sleep better at night).