The lesson from the ‘the tortoise and the hare’ fable, delivers investment success!

regular saving aids investment success - contrasting the approach of the tortoise from the hareWe set out to demonstrate that regular saving aids investment success. This is a lesson that could be taught to children, to make use of their pocket money and have the excitement of achieving investment goals (like buying the new game, or getting the new body board for the next family holiday to the beach!).

Saving regular, affordable amounts, consistently over time is more likely to result in greater wealth accumulation than is waiting for large one-off gains to be realised.

Regular saving aids investment success in two ways

Firstly, the magic of compound interest (earnings) is as valid today as it was when you first started your school-based bank account: deposit regularly, don’t sell down/ (withdraw) – and invest the accumulating wealth wisely.  An ‘unexplained’ benefit of such a process is that the acquired wealth is also usually more enduring.

Secondly, in the process you will be using a strategy called dollar-cost-averaging: you buy into the market at regular intervals, investing consistent amounts. This averages the cost per unit of the investment made, whether into shares or units in a managed fund.

Superannuation is proof that regular savings aids investment success

Combining the magic of compound ‘interest’; with the benefits of dollar-cost-averaging (or regular saving) – and time; and you have a process that has been proven time after time to enhance the wealth of the diligent investor. These are the core elements of superannuation investment: contributions are made in similar amount at regular intervals, invested (and earnings re-invested) over a prolonged period of time, accumulating the wealth required to provide a level of financial independence in retirement.

We have published the article ‘Wealth Accumulation incrementally‘ in our website Library, showing the result of such a process which is applicable to anybody willing to make the effort: and stick with the program.

‘Don’t delay, start today!’

The sooner a regular savings process is started, the sooner you will start to realise the benefits of the plan. For instance, it is demonstrably more successful to start saving $100 per month now for a ten year period, than to start saving $225 per month in 5 years time, for five years (therefore ending at the same goal date) – assuming the same investment strategy is adopted! 1

You will find articles on our website, such as ‘Dollar Cost Averaging’, that will further help to explain and/ or demonstrate the benefits and effects of engaging this strategy. (The important element is consistency and duration: short term-ism, or persistently steady asset prices may not add a lot of value from the DCA perspective – and strategic selection of diversified investment assets also plays an important part in the strategy.)

Getting started with your regular investment strategy –

The experienced advisers at Continuum Financial Planners Pty Ltd are very well versed with the process and the benefits of regular investing and dollar cost averaging as investment strategies to achieve longer-term goals and objectives (including early retirement, education for children, special events etc): to benefit from their experiences call our office (on 07-34213456), or Contact Us to discuss further how regular saving aids investment success in your particular situation.

1 For this exercise we have assumed a simple 5% p.a. consistent return over the period. Whilst the rate is simplistic, we do have clients who are using this strategy effectively, to provide for their children’s future financial needs and other specific wealth management goals.

(This article was first posted in June 2011; it has been occasionally refreshed, most recently, in October 2021.)