{"id":92466,"date":"2026-04-23T08:42:25","date_gmt":"2026-04-23T13:42:25","guid":{"rendered":"https:\/\/www.bricktowntom.com\/blog\/?p=92466"},"modified":"2026-04-23T08:42:25","modified_gmt":"2026-04-23T13:42:25","slug":"focus-on-your-saving-rate-when-the-market-fluctuates","status":"publish","type":"post","link":"https:\/\/www.bricktowntom.com\/blog\/04\/focus-on-your-saving-rate-when-the-market-fluctuates.html","title":{"rendered":"Focus on Your Saving Rate When the Market Fluctuates"},"content":{"rendered":"
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\"Focus<\/figure>\n<\/div>\n

Wow, what a ride this year has been! It\u2019s only natural to feel anxious when the stock market drops or spikes too fast. The stock market has been pretty crazy over the last few years so we should be used to the volatility by now. Still, it’s hard to see the stock market drops and inflation increasing every day. We live in a crazy time. I originally wrote this post in 2016 and it still applies today. When the market is volatile, it\u2019s best to focus on increasing your saving rate. This is especially true when you have 5 or more years left before retirement<\/a>.<\/p>\n

New investors tend to fixate on finding the \u201cbest\u201d investments, but what they really should focus on is increasing their saving rate. Most people can increase their saving rate by 10 to 20% without a drastic change in lifestyle. On the other hand, it\u2019s very difficult to beat the market consistently and increase your rate of return. When you\u2019re starting out<\/strong>, your portfolio value will be relatively small, and increasing your saving rate will have a much bigger impact than increasing your ROI (return on investment).<\/p>\n

Let\u2019s say your portfolio is worth $100,000. If you increase your ROI by 2%, that\u2019s only $2,000 extra. It is much easier to cut back a bit and focus on investing $2,000 extra<\/strong> instead. Your saving rate is directly under your control, but the stock market is out of your hands, as the recent volatility illustrated.<\/p>\n

New investors<\/h2>\n

When I was new to investing, I tried to pick the \u201cbest\u201d investments. I did it wrong, though. In my 401k<\/a>, I picked the funds with the highest returns from the previous year. I didn\u2019t know that over 90% of actively manage funds underperform low-cost index funds over the long term. I also didn\u2019t know that the stock market is cyclic. The best funds from the previous year probably won\u2019t be able to repeat their performance the following year. <\/strong><\/p>\n

In my brokerage accounts, I purchased speculative tech stocks because the price kept increasing. This didn\u2019t turn out well because a few years later, the dot com bubble popped and my portfolio crashed along with Pets.com. While experience is the best teacher, I still wish I had taken more time to learn about investing to avoid those pitfalls. It sure wasn\u2019t fun to go through those stressful periods.<\/p>\n

That\u2019s why I encourage everyone to start investing as early as possible<\/a>. It can take many years to formulate an investment strategy that you\u2019re comfortable with. You need to go through a few market cycles to see how you react to the gut-wrenching drops. Here is the investing strategy that I can live with through the ups and downs. It works for me, but it might not be the right fit for you. Everyone needs to figure out their own investing strategy.<\/p>\n