Forefront’s Market Notes: Income, Savings, or Returns. Which Matters Most?

Income, Savings, or Returns. Which Matters Most?


The idea of a “side hustle” isn’t new, but we just called it a second job when I was growing up. Now, the concept of a side hustle is all the rage and is a weekly conversation with clients.

This weekend I spent time with a friend from high school that was looking for some financial planning help. He runs a small plumbing company with his brother, using the money from their Bar Mitzvahs to buy their first van. Their dad, a client of mine, loves to tell the story.

Both brothers were talking to me about buying a vending machine route.

Their plumbing company has nearly doubled in the past eighteen months, and they have enough work to put a third and maybe a fourth van on the road. My response to their idea was, “What do you know about vending machines?”



Income is the catalyst to your financial plan, but instead of focusing on “side hustles,” lean into your career and skillset that will ultimately increase your earnings far more than walking your neighbor’s dog.

It might seem obvious to some, but there is a direct correlation with savings rates rising as income rises. Simply put, if you have more money, you will save more money. While many advisors will tell you to save more, they never talk about HOW to save more, and sometimes a long-term savings plan means short-term spending to enhance your skills and abilities so you can increase your income.

Income is the foundation, the pillar that most wealth is built on for people. While the talking heads on TV, and nearly every advisor I have ever met will tell you that you have a spending problem. Demonizing lattes is much easier than discussing increasing your income through your career path or a completely new career path.



The discipline to save is more important than the savings itself. The National Bureau of Economic Research points out that households that have the discipline to save a portion of their income consistently are more likely to accumulate significant wealth over time. This seems like a no-brainer; the people who save money regularly have a better chance of building wealth. Easier said than done.

While increasing your income is paramount, focusing on the percentage of income you save is just as important. I would be reticent if I talked about savings without discussing cash flow management alongside it. You can’t start to save consistently until you know how much money is coming in each month and how much money is going out. Once that has been established, automating a disciplined plan becomes much easier.




Returns don’t matter if you don’t panic. The chart above is one of my favorites, with the orange bars showing the S&P500 returns each year. The blue line you see is the rolling 30-year returns. While year-to-year returns are all over the map, the rolling 30-year returns don’t change much from year to year.

If savings is an exercise to measure how disciplined you are, returns are an exercise in measuring how emotional you are. During 2022, several clients expressed that they wished they had taken on less risk to avoid the market drop. In 2023, those same clients wish they took on more risk to outperform the markets. Fear and greed are the two most powerful emotions we can feel.

One-year returns can make you feel incredible, euphoric, and amazing, but at the same time can make you feel terrible, panicked, and scared. Regardless of your thoughts, your one-year market returns will have minimal bearing on your long-term results.

It is human nature to pay attention to short-term results, but actual investment success occurs when you realize the long run is the only time horizon that matters.


Which Matters the Most?

Income is the most crucial factor in building long-term wealth, followed by the discipline you show in having a consistent savings rate that rises over time. Short-term market returns don’t matter much at all. Long-term exposure to the equity market will help you build wealth, but only if you are disciplined enough to save and unemotional enough to avoid greed and fear.


Stock market calendar this week:

None scheduled
8:30 AM U.S. retail sales
8:30 AM Retail sales minus autos
8:30 AM Import price index
8:30 AM Import price index minus fuel
8:30 AM Empire State manufacturing survey
10:00 AM Business inventories
11:00 AM Minneapolis Fed President Kashkari speaks
8:30 AM Housing starts
8:30 AM Building permits
9:15 AM Industrial production
9:15 AM Capacity utilization
2:00 PM FOMC minutes of July meeting
8:30 AM Initial jobless claims
8:30 AM Philadelphia Fed manufacturing survey
10:00 AM U.S. leading economic indicators
None scheduled

Most anticipated earnings for this week:


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About Amit: I am a first generation American, the son of a working-class Indian family, and I lived through my parents’ struggle to find their place in this country, to put down roots that would sustain them as well as their children in a new land. As they encouraged me to excel in school and fostered my hobbies and interests, I was keenly aware of the dynamic between them. I understood that there was a difference between where they came from individually and where we were now. They worked hard in their individual capacities, but they weren’t always on the same page about financial issues – and that can make or break a family’s future. I didn’t know it at the time, but this laid the groundwork for my passion towards financial services and helping families succeed.