The Savings Rate Secret: Why How Much You Save Matters More Than XEQT's Returns

I spent the first two years of my investing journey obsessing over the wrong thing.

I am not exaggerating. I would sit at my kitchen table after work, laptop open, spreadsheets glowing, comparing the ten-year annualized returns of every all-in-one ETF I could find. XEQT versus XGRO. XEQT versus VEQT. XEQT versus a custom three-fund portfolio. I ran backtests. I read whitepapers. I joined Reddit threads that devolved into arguments about a 0.02% difference in MER. I genuinely believed that if I could just find the fund with the absolute best risk-adjusted return, I would be set.

Meanwhile, I was investing $200 a month.

Two hundred dollars. That was it. And the entire time I was agonizing over whether Fund A would return 7.8% or Fund B would return 8.1%, the actual difference on my tiny $200 monthly contribution was — and I calculated this later — about $4 per year. Four dollars. I burned more mental energy on that decision than most people spend planning a vacation, and the payoff was the equivalent of a mediocre latte.

The thing that would have actually changed my financial trajectory? Bumping that $200 to $500. Or $800. Or $1,000. That single change — saving more — would have been worth tens of thousands of dollars more than any fund selection decision I could have made. And it took me embarrassingly long to figure that out.

This post is about the most underrated variable in personal finance: your savings rate. Not your returns. Not your fund choice. Not the market. How much of your income you funnel into investments every single month. If you get this one thing right, everything else — including holding a solid fund like XEQT — just falls into place.

1. The Variable You Actually Control

Here is a truth that the financial media does not want you to internalize, because it would make their content a lot less exciting: you have almost zero control over market returns.

You cannot control whether the S&P 500 returns 12% or 2% next year. You cannot control whether emerging markets rally or slump. You cannot control interest rate decisions, inflation numbers, trade policies, or geopolitical events. The market is going to do what the market is going to do, and your opinion about it is irrelevant.

But you know what you can control?

• How much you earn
• How much you spend
• The difference between those two numbers
• Where you put that difference every month

That difference — your savings rate — is the single most powerful lever in your financial life, especially in the first decade of investing. And yet most new investors spend 90% of their energy on the one thing they cannot influence (returns) and 10% on the one thing they can (savings rate).

Flip that ratio and you will be shocked at the results.

2. The Math That Changed How I Think About Money

Let me show you what I mean with real numbers. Imagine four different investors, all earning different savings rates, all investing in XEQT, all earning the same long-term average return of 8% annually. The only difference is how much they invest each month.

Read that table one more time. At 10 years, the difference between the $200/month investor and the $1,000/month investor is about $146,000. At 30 years, it is over $1.19 million. Same return. Same fund. Same market conditions. The only difference is savings rate.

Now think about all those hours spent debating whether XEQT or VEQT would return 0.1% more per year. At $200/month, a 0.1% difference in annual return over 10 years is worth roughly $180. Moving from $200/month to $500/month over that same 10 years is worth roughly $55,000. The savings rate increase is worth more than 300 times the return difference.

This is the math that changed everything for me.

3. The Crossover Point: When Returns Start to Matter

Now, I am not saying returns never matter. They absolutely do — eventually. But there is a crossover point, and understanding it will fundamentally change how you allocate your time and energy as an investor.

In your first few years of investing, the vast majority of your portfolio’s growth comes from your contributions, not from market returns. Here is an example using $500/month at 8% annual returns:

Look at year 5. Your contributions account for over 80% of your portfolio’s value. Even at year 10, your contributions still represent about two-thirds of your total balance. It is not until somewhere around year 15 that compounding returns begin to pull their own weight, and not until year 20 that returns actually contribute more than your own deposits.

This is the crossover point. Before it, your savings rate is king. After it, compounding takes the wheel. But you cannot reach the compounding phase without first building a substantial base through aggressive saving.

The lesson is simple: in your first 10 to 15 years of investing, every extra dollar you save matters far more than every extra basis point of return.

4. Why Saving $200 More Per Month Beats a 2% Higher Return

This is the comparison that really drives the point home. Let us pit two investors against each other:

• Investor A saves $500/month and earns 8% annually (a reasonable long-term XEQT expectation)
• Investor B saves $500/month and earns 10% annually (an unrealistically optimistic scenario — maybe they are a stock-picking genius)
• Investor C saves $700/month and earns 8% annually (same plain-vanilla XEQT returns, just saves $200 more per month)

At 10 years, Investor C (who just saves $200 more) is ahead of Investor B (who somehow earns 2% more annually) by over $25,000. At 20 years, Investor C is still ahead by nearly $30,000. It is not until about the 25-year mark that the higher return finally catches up.

And here is the kicker: earning a consistent 2% above market returns is extraordinarily difficult. Most professional fund managers fail to beat their benchmark over long periods. But saving an extra $200 per month? That is entirely achievable. It might mean cooking at home two more nights a week, cancelling a streaming service you barely use, or negotiating a better rate on your car insurance.

One of these strategies requires you to be smarter than Wall Street. The other requires you to pack a lunch. I know which one I am betting on.

5. Practical Ways to Increase Your Savings Rate (Canadian Edition)

Alright, so you are convinced that savings rate matters. Now the question is: how do you actually increase it? Here are strategies that have worked for me and that are specific to life in Canada.

Audit your subscriptions ruthlessly. Open your banking app right now and scroll through last month’s transactions. I did this exercise in 2023 and found I was paying for two music streaming services (forgot to cancel one), a meditation app I used twice, and a cloud storage plan I did not need because my phone already had enough space. That was about $45/month — or $540/year — going to XEQT instead.

Negotiate your recurring bills. Call your internet provider, your cell phone carrier, and your insurance company. In Canada, telecom companies are notorious for having retention deals they do not advertise. I called Rogers, said I was thinking of switching, and they knocked $15 off my monthly internet bill on the spot. That took eight minutes.

Use cashback credit cards strategically. Cards like the Tangerine Mastercard, the Rogers World Elite, or the Scotiabank Momentum Visa Infinite offer solid cashback on groceries, gas, and recurring bills. I funnel all my spending through a cashback card and redirect the cash back directly into my Wealthsimple account. It adds up to a few hundred dollars a year — essentially free XEQT purchases.

Cook more, order less. I know this sounds like boomer advice, but the numbers do not lie. The average Canadian household spends over $300 a month on restaurants and takeout. Cutting that in half and investing the difference is $150/month straight into your portfolio.

Use your TFSA and RRSP contribution room wisely. If you are getting a tax refund from RRSP contributions, do not spend the refund. Reinvest it. This creates a compounding loop: contribute to your RRSP, get a refund, invest the refund, repeat. Your effective savings rate goes up without your take-home lifestyle changing at all.

Take advantage of employer matching. If your employer offers any kind of matching contribution to a group RRSP or DPSP, make sure you are contributing enough to get the full match. This is literally free money that instantly doubles your savings rate on those dollars.

Sell things you do not use. Facebook Marketplace, Kijiji, and Poshmark exist for a reason. I sold an old bike, some camera gear I never touched, and a handful of books and put the entire amount — about $800 — into XEQT. That is not a recurring strategy, but it is a great way to give your portfolio a one-time boost while decluttering your life.

6. Pay Yourself First: Automate Your Savings Rate With XEQT

The single best thing I ever did for my savings rate was making it automatic. Not “I’ll transfer money when I remember.” Not “I’ll invest whatever is left at the end of the month.” Fully automatic, every payday, before I can even think about spending it.

Here is how I set it up, and how you can too:

1. Determine your savings rate target. If you are currently saving 10% of your take-home pay, aim for 15%. If you are at 0%, start with 5 or 10%. Any number is better than zero.
2. Calculate the dollar amount. If your take-home pay is $3,500 biweekly and your target is 15%, that is $525 per pay period.
3. Set up automatic deposits into Wealthsimple. You can schedule recurring deposits from your bank account to your Wealthsimple TFSA or RRSP on whatever cadence matches your payday.
4. Set up automatic XEQT purchases. Wealthsimple lets you automate your XEQT purchases so that every deposit is immediately invested. No logging in, no deciding, no second-guessing.

The beauty of this system is that it removes willpower from the equation entirely. The money leaves your chequing account before you see it. You build your budget around what remains. After a month or two, you do not even notice the “missing” money — but your portfolio notices it a lot.

This is the “pay yourself first” philosophy in action. Your future self gets paid before your landlord, before your phone company, before Skip the Dishes. And when you pair this philosophy with a low-cost, globally diversified fund like XEQT, every automated dollar goes to work immediately across thousands of companies in dozens of countries.

7. The 1% Method: How to Gradually Increase Your Savings Rate Without Pain

If jumping from a 10% savings rate to 20% overnight sounds terrifying, I get it. That is a big lifestyle change, and drastic changes rarely stick. Instead, try what I call the 1% method.

Every two to three months, increase your automatic investment amount by 1% of your take-home income. If you bring home $4,000/month, that is an extra $40 every couple of months. Here is what that looks like over two years:

• Month 1: $400/month (10% of $4,000)
• Month 3: $440/month (11%)
• Month 5: $480/month (12%)
• Month 7: $520/month (13%)
• Month 9: $560/month (14%)
• Month 12: $640/month (16%)
• Month 18: $800/month (20%)
• Month 24: $960/month (24%)

In two years, you have gone from saving 10% to saving 24% of your income — more than doubling your savings rate. And because each individual increase is so small ($40 at a time), you barely feel it. You adjust your spending slightly, maybe skip one takeout meal, and life goes on.

The key is to increase your automatic Wealthsimple deposit every time. Do not just “decide” to save more — update the automation. Make it structural, not aspirational.

I started at roughly 12% of my take-home pay. Over about three years, using a version of this method plus a couple of small raises, I got to just over 30%. The early increases were the hardest. By the time I was at 20%, each additional percent felt almost invisible. Your spending adapts to your income faster than you think — and it adapts downward just as easily as it expands upward, as long as the change is gradual.

8. Why XEQT Makes the Savings Rate Strategy Even More Powerful

Not all funds are created equal when it comes to making your savings rate count. XEQT has several features that make it an ideal home for every dollar you save.

Low fees preserve your contributions. XEQT has an MER of just 0.20%. On a $100,000 portfolio, that is $200/year. Compare that to a typical mutual fund charging 2.0% — that is $2,000/year on the same balance. The $1,800 difference is money that stays invested and compounds for you. When your savings rate is the engine of your wealth, you want as little friction as possible between your contributions and your growth. High fees are a direct tax on your savings rate.

Global diversification maximizes long-term growth. XEQT holds over 9,000 stocks across Canada, the US, international developed markets, and emerging markets. This means your savings are not concentrated in one country or sector. Over long periods, global diversification has historically delivered more consistent returns than any single market — which means your contributions compound more reliably.

Simplicity prevents costly mistakes. When you hold one fund that does everything, you are far less likely to tinker, panic-sell, or make emotional decisions that erode your savings. Every dollar you invest in XEQT stays invested. There is no rebalancing to forget, no sector bets to second-guess, no individual stocks to agonize over. The simplicity protects your savings rate from your own worst impulses.

Zero commissions on Wealthsimple. When you are making frequent, smaller contributions — which is exactly what a high-savings-rate strategy involves — trading commissions can eat into your returns. On Wealthsimple, buying XEQT costs nothing. Whether you invest $50 or $5,000, the commission is zero. This means 100% of your savings rate goes into the market.

If you are curious about the right amount to start with, I have written a detailed breakdown of how much to invest in XEQT monthly. But the short answer is always the same: as much as you can, as consistently as you can.

9. The Psychological Edge: Focusing on What You Control

There is one more reason I am passionate about the savings rate approach, and it has nothing to do with spreadsheets. It is about mental health.

When you tie your sense of financial progress to market returns, you are at the mercy of forces you cannot control. Markets drop 20% and you feel like a failure. Markets rally 30% and you feel like a genius — even though you did nothing different in either scenario. Your emotional state becomes a hostage of the S&P 500, and that is an exhausting way to live.

But when you tie your sense of progress to your savings rate, everything changes. Did you invest your target amount this month? Great — that is a win regardless of what the market did. Did you increase your savings rate by 1%? Incredible — you are making measurable, permanent progress toward financial independence. Did the market tank this week? It does not matter to your savings rate. You still contributed. You still showed up. And because you are dollar-cost averaging, the dip actually means you bought more shares for the same amount of money.

This shift in focus — from returns to savings rate — gave me a sense of calm and control that I never had as a return-obsessed investor. I stopped checking my portfolio every day. I stopped reading market prediction articles. I stopped caring about whether I was beating some benchmark. Instead, I started caring about one number: how much am I investing this month?

That question has a concrete, actionable answer every single time. And the cumulative effect of answering it well, month after month, year after year, is the kind of wealth that makes “picking the right fund” look like a rounding error.

The Bottom Line

If you take one thing from this post, let it be this: the gap between where you are now and where you want to be financially is almost certainly a savings rate problem, not a returns problem.

The fund you choose matters. Keeping fees low matters. Staying diversified matters. But none of those things matter as much as the raw dollars you put into the market every month, especially in your first 10 to 15 years of investing. A $200/month increase in your savings rate will do more for your net worth than any amount of fund research, market timing, or performance chasing.

So here is my challenge to you. This week, do one thing to increase your savings rate:

• Cancel one subscription you do not actively use
• Increase your automatic XEQT contribution by $50 or $100
• Set up automation if you have not already — here is how
• Apply the 1% method and bump your savings rate by one percentage point

You do not need to find the perfect fund. You do not need to time the market. You do not need a finance degree or a stock-picking algorithm. You just need to save more, invest it consistently, and let time do the heavy lifting.

XEQT makes the investing part simple. The saving part is up to you. And that is actually great news — because it means your financial future is in your hands, not the market’s.