Importance of saving rate

Investors often focus primarily on asset allocation, expenses associated with investments (such as transaction fee, expense ratios), tax efficiency (types of account), sector allocation, active vs passive etc, to maximize the return on investment. Further, importance of saving early is also well documented to reach the individuals financial goals. In this article, role of savings rate is presented to understand its impact on an investors financial goals. Role of savings rate effect is compared with return on investment.

Savings rate is defined as percentage of income saved by an individual or entity towards a financial goal.