By James Saft
(Reuters) – Few advisers want to say it, and no client wants to hear it, but your best bet isn’t obsessing over funds and strategies but simply raising your savings rate.
The investment industry – and clients – are intensely focused on how to maximize returns, with much ink, brain power and tears spent on trying to divine which fund to choose and what strategy to adopt.
While this is entirely appropriate, and sometimes even fruitful, it is also, in many ways, a self-defeating diversion.
The truth is that the primary generator of wealth is earnings, and the only earnings that really count are those you don’t spend but invest.
Deferring consumption is a much tougher sell than the alchemy of fund selection, and so the industry, with clients and advisers both complicit, spends far more time thinking of one than the other.