The Investment Equation: Focus on What You Can Control

Investment Portfolio Outcome = Contributions × (1+Returns)^Time (time horizon)

At first glance, this equation seems simple. But within its simplicity lies a powerful insight that most investors overlook.

Let’s break it down:

· Contributions – How much you invest regularly towards your investment portfolio.

· Time – How long you stay invested i.e. your time horizon for the investment.

· Returns – The growth rate your investments generated compounding your contributions along your time horizon.

Now here’s the key: only two of these variables are within your control—contributions and time. The third, returns, is largely unpredictable and outside your control.

And yet, ironically, most individual investors focus almost entirely on the one thing they can't control: returns.

Chasing Returns: The Cost of a Misguided Focus

Scroll through any social media platform or financial forum, and you'll see investors constantly comparing returns:

“This fund returned 14% last year, and mine only returned 10%.”

“Should I sell my globally diversified portfolio because the S&P 500 did better?”

“Is it better to chase tech stocks or buy the latest AI ETF?”

These questions are driven by a returns-first mindset. But this mindset is not only inefficient—it can also be harmful.

Here’s Why:

When you spend your time and energy chasing returns:

· You’re more likely to switch strategies frequently.

· You may take on unnecessary risk.

· You ignore the foundation of long-term wealth: consistency and patience.

· You risk derailing your other controlled variables—especially contribution discipline and staying invested for long periods.

The Power of the Controlled Variables

Let’s shift the focus.

You do control:

1. Contributions (how much you invest).

2. Time (how long you keep investing).

Let’s say you’re 30 years old. You invest $7,000 per year into your portfolio.

Assume:

· You stay invested for 30 years.

· Average annual return: 6%.

Your portfolio will grow to around $550,000 by the time you're 60.

Now let’s see what happens when you increase your contributions to $9,000 per year, without doing anything to change returns:

· You end up with $700,000+.

· An additional $2000 a year increase in contributions led to a >25% increase in the final portfolio.

What if you start 5 years earlier with the same $7,000?

· You get $780,000 instead of $550,000—because time created a compounding effect.

Now compare this to the “chasing returns” approach:

· To match the $780,000 outcome without increasing contributions or time, you’d need a return of over 7.5% annually.

That extra 1.5% per year might sound small—but it comes with much higher risk, and a lower likelihood of success.

A Simple but Powerful Truth

Your savings rate and your time in the market are the biggest drivers of your wealth.

Yet most people:

· Don’t optimize their contributions.

· Don’t give investments enough time to grow.

· Constantly chase performance or switch strategies too often.

This is like trying to win a race by gambling on the wind direction instead of putting in consistent effort and staying the course.

How to Maximize Your Controlled Variables

1. Increase Contributions Through Income & Expense Optimization

· Focus on building your skills or business to increase income.

· Use smart financial planning to optimize expenses.

· Automate your savings so investing becomes a habit.

For example:

If your income increases by $10,000 and you commit just half of that to investing, you’re creating $5,000 in new yearly contributions—that’s over $150,000 more plus compounding with modest returns at retirement.

2. Maximize Time in the Market

· Start early, even with small amounts.

· Avoid withdrawing funds for unnecessary reasons.

· Stick to your plan during volatile markets.

The longer you stay invested, the more compound growth works in your favor.

3. Delegate Return Optimization to a Fiduciary Expert

Returns are unpredictable—but how they’re managed matters.

Working with a professional investment manager who:

· Understands your risk profile.

· Aligns your portfolio with your goals.

· Uses disciplined, institutional-grade strategies.

· Acts as a fiduciary (in your best interest).

…can ensure that the uncontrolled variable is managed wisely, without compromising your ability to optimize the other two.

At Alamut Capital, we help you focus on what truly drives wealth—long-term contribution discipline, optimal portfolio construction, and time-tested risk-aware strategies that are tailored to your life stage and goals.

Bottom Line: Focus on What You Can Control

To build real, lasting wealth:

· Maximize contributions.

· Stay invested for as long as possible.

· Let professionals handle the complexity of return generation based on your goals and risk capacity.

Stop chasing returns. Start building real wealth—on your terms.

Want a personalized portfolio strategy aligned with your risk and goals?

Book a call with us today.