A Year Choosing Between Two Funds, Six Percent Saved: What Is A Good Savings Rate?
Fiachra Dunleavy had spent the better part of a year deciding between two index funds. He had read the comparisons, understood the fee difference to two decimal places, and could explain the tracking error to anybody unlucky enough to ask.
Across that same year he put aside roughly six percent of what he earned, which is a figure he had never chosen. It was simply what was left.
The fee difference between those two funds, over the balance he had, came to a few dollars a year. Lifting what he put aside by four percentage points was worth several thousand. He had spent a year on the smaller of the two levers.
The rate is the lever, and almost nobody picks it
Ask somebody what they invest in and the answer arrives immediately. Ask what percentage of their income they save and there is usually a pause, then an estimate. The first is a decision people enjoy making. The second is the one that sets the date, and most people have never made it at all.
Fiachra was not careless. He contributed every month without fail, he understood compounding, and he had a target he could name. What he had never done is put the target, the timeline and the contribution in the same place and see whether they agreed with each other. Putting the target and the contribution side by side took about fifteen minutes.
The fifteen minutes that produced a rate
What went in was ordinary: what he earns, what he already holds, what he adds each month, and the figure and the age he had in mind without ever having tested them against each other.
What came back · in about fifteen minutes
a percentage, derived from his figure and his date rather than from a rule of thumb. It was higher than six and lower than he had feared, which is usually how this goes.
a hundred thousand, then a quarter of a million, then half, each with an estimated year. A million is a number nobody can picture. The first checkpoint is close enough to aim at.
rate first, then income, then fees and allocation last. The ordering was the uncomfortable part, because he had spent the year on the item at the bottom.
what happens at six, at ten, at fourteen. Seeing the three dates side by side does more than any argument about discipline.
He settled on a rate between the second and third scenario rather than the highest, which is probably why it survived. The fund he eventually chose was one of the two he had been comparing, and it made less difference than the four points did.
The milestone ladder, in order
Rung 1 · Decide the rate rather than inherit it – whatever is left at the end of the month is not a savings rate, it is a residue. Choosing a figure and moving it first is the single change that does most of the work.
Rung 2 · Aim at the first checkpoint, not the million – a hundred thousand is a number a person can hold in their head and reach inside a decade. A million at twenty-nine is an abstraction, and abstractions do not survive bad months.
Rung 3 · Put the levers in order of effect – rate, then income, then costs. Fees and allocation genuinely matter and they matter most once the balance is large, which is precisely when most people stop paying attention to them.
Rung 4 · Revisit once a year and not more – the plan does not improve by being opened weekly, and checking a balance often is a reliable way to make yourself worse at this. An annual look at the rate, against an income that has changed, is enough.
The rung that mattered for Fiachra was the third. Nothing he had read was wrong about fees. It was simply advice about a stage he had not reached, applied to a balance where it could not do very much.
Why the fund argument is so much more appealing
Because it costs nothing this month. Researching allocations is free, it feels like competence, and it can continue indefinitely without anybody having to give anything up. Raising a savings rate is a decision with a bill attached to it in four weeks.
It is also the part where the internet is loudest, which makes it feel like the important question. The quieter question, how much goes in, is the one that determines when.
- A rate chosen deliberately and moved first
- A first checkpoint close enough to aim at
- Levers ranked by effect at your current balance
- Three rates compared against three dates
- One review a year, against a changed income
- Saving whatever survives the month
- Aiming only at a figure decades away
- Optimising fees while the balance is small
- Treating fund choice as the main decision
- Opening the plan weekly and changing nothing
Order is the whole discipline: choose the rate, aim at the first checkpoint, rank the levers, review once a year. Most people start at the bottom of the list because that is where the interesting reading is.
What it costs next to the alternatives
Fiachra could have kept comparing funds, which is free and had already taken a year. Here is how the usual approaches compare with settling the rate first.
| Approach | Cost | What it does about the date |
|---|---|---|
| Compare funds and fees | Free | Optimises the weakest lever at a small balance |
| A generic rule of thumb | Free | A number from somebody who has not seen your target |
| A financial adviser | $200–400/hr | The right call for allocation and tax, and priced accordingly |
| First Million Milestone Planner | $49 | The rate your target needs, with dated checkpoints |
“Are these projections not just guesses about returns?” They rest on an assumed return, and that assumption will be wrong in every individual year, which is worth saying plainly rather than burying. Markets fall, sequences matter, and a date produced today is a planning figure rather than a promise. What the arithmetic does hold up is the comparison between scenarios: whatever returns turn out to be, a higher contribution reaches the number sooner than a lower one, and that part does not depend on the guess. Investing carries risk including the loss of capital, past performance predicts nothing, and none of this is investment, financial or tax advice. A licensed adviser is the right place for allocation and tax questions.
Two more who set the rate first
“My savings rate was not a decision, it was a leftover, and some months the leftover was nothing. Choosing a figure and moving it on payday changed more in one month than two years of reading had.”
Grainne S. · thirty-four, started at nine percent, Spokane WA
“A million was so far away it may as well have been fictional, so I never behaved as though it existed. Aiming at the first checkpoint instead made it something I could actually be ahead or behind on.”
Odhran B. · twenty-nine, first checkpoint in sight, Erie PA
If the rate is settled and the difficulty is making it happen every month without thinking about it, the Set & Forget Savings Plan is built for that part. Results vary; this is general guidance and not investment advice.
Fifteen minutes, and the argument moves off funds for good: the rate your own target needs, checkpoints with years attached at a hundred thousand and a quarter of a million, the levers ranked by what they actually do at your balance, and the same plan at three different rates. The fund question keeps. It was never the one setting the date.
*Individual results may vary.
What is a good savings rate?
Does the savings rate matter more than the returns?
Why does everyone argue about funds instead?
What if I cannot reach the rate the target needs?
How often should the plan be revisited?
Is this investment advice?
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