Finding Strength in Our Lack of Investment Control

Some of the links in this post are from our sponsors. Read our disclosure to see how we make money.

Retirement Planning

The following is a contribution from Matt at Mom and Dad Money. If you’re interested in contributing to Frugal Rules, please consult our guidelines and contact us.


The world of investing can feel pretty scary sometimes. We’re reminded daily of the market ups and downs. If you flip on the TV, one talking head is screaming at you to sell while another is saying you’d be crazy not to buy. On top of that, our financial goals are very real and very important to us, and with all of this noise it’s easy to feel like if we don’t do the right thing right away, our goals and gains will all be lost.

Today, I want to face those fears. I want to recognize that there are certain parts of the investment world that we can’t control, and I want to find strength in that knowledge by letting them go. I want to embrace the few simple things we can control so that we can take charge of our financial lives and put ourselves on the right track towards achieving our goals.

There’s a lot to Investing That we Can’t Control


Let’s be up front about some of the harsh realities of investing.

We cannot control whether the markets are up or down. We cannot successfully time those ups and downs consistently over any extended time period. And yet, research shows that general market movements account for around 75% of your personal investment returns. Realizing that three quarters of your returns come from something you can’t control can be a scary proposition.

Another 10% of our returns come from the specific stocks, bonds and other investments that we choose. And yet the evidence is overwhelming that our choices here are more likely to hurt us than help us, when compared to investing in simple index funds.

This information can be disheartening. Again, our financial goals are important to us and we want to feel like we can simply try harder to give ourselves an edge. And this is in fact what many people do. Despite the evidence, they continue to look for that edge and harm themselves in the process.

We need to look no further than the fact that individual investors actually earn worse returns than the mutual funds they invest in, simply because of the timing of their contributions and withdrawals. This self-defeating behavior is a direct by-product of trying to control the things we cannot control.

Empower Yourself by Focusing on What you Can Control


So how are we as investors supposed to react to all of this? How do we reconcile our desire to meet our financial goals with the reality that we have very little control over some of the major factors that determine whether we reach them? Simple.

We embrace it. We embrace the knowledge that there are certain things that are out of our control and we stop worrying about trying to control them. And we find strength in the things we can control, the things that actually matter.

Take stock of your goals. Why are you trying to outperform?


Before getting into strategy, we need to step back and reflect on what we are actually investing for. Perhaps it’s retirement or our children’s college education. Maybe it’s a down payment on a house we’d like to buy in a few years.

We all have different financial goals, but I would seriously doubt that any of us has sat down and said “I want to beat the market.” We all want fair returns, but as we go forward with an investment plan, we need to keep in mind the real reasons we’re investing.

Factors You Can Control


While we can’t control the market movements and we aren’t likely to pick winning stocks, there are several factors we can control that will have a big impact on our investment results. If we focus on these factors instead, not only does investing become much simpler but, we drastically improve our chances of actually reaching our goals.

Savings Rate – The amount of money we invest on a regular basis has a huge impact on the amount of money we end up with. The more money we invest, and the earlier we do it, the more time it has to earn compound returns. Simply investing money regularly is one of the most powerful tools in our arsenal.

Asset Allocation – Our asset allocation is the portion of our money that we put towards each type of investment, such as stocks and bonds. While we can’t control the movements of the market, our asset allocation allows us to control our exposure to those movements. By assigning more of our money to risky investments like stocks, we increase our potential returns but also increase our downside risk. Put more in less risky investments like bonds, and the opposite is true. This basic decision as to how we divvy up our money goes a long way towards determining our investment returns.

Costs – Every dollar we pay in fees is a dollar that doesn’t earn us multiple dollars in compound returns. A Morningstar study actually showed that cost was the single best predictor of future mutual fund performance, even better than its own star rating system. Costs come in the form of mutual fund fees, trading commissions, taxes, and any other form Wall Street can dream up. Minimizing these costs increases our chances for long term success.

Diversification – Everyone who writes about investing has said this a million times: diversification is the only free lunch in investing. It’s the one tool that allows you to decrease your investment risk without decreasing your expected returns. Picking total-market index funds allows you to benefit from the returns from every company in the world. No matter what company, what sector, or what country is currently hot, you’ll be in on the action. And whichever one is currently faltering will only represent a small part of your money. It’s a win-win.

Stay focused. Sleep well. Succeed.


Find strength in the knowledge that ignoring the things you can’t control will keep you out of harm’s way. Embrace the finite list of simple things you can control that will help you succeed. Make an investment plan that puts you in charge of your long term strategy and allows you to tune out the day to day noise. If you can do these things, you will be well on your way to reaching your financial goals.

Matt’s Bio: Matt Becker is a proud father and husband and his site Mom and Dad Money is dedicated to helping new parents build financial security for their family. 


Editor’s note: I want to thank Matt for focusing on something that many investors overlook – the fact that we need to focus on what we can control and not let emotion get in the way of the rest. Emotion is great, but when mixed with investing it can have a negative impact.

Photo courtesy of:

The following two tabs change content below.

John is the founder of Frugal Rules, a dad, husband and veteran of the financial services industry whose writing has been featured in Forbes, CNBC, Yahoo Finance and more.

Passionate about helping people learn from his mistakes, John shares financial tools and tips to help you enjoy the freedom that comes from living frugally. One of his favorite tools is Personal Capital , which he used to plan for retirement and keep track of his finances in less than 15 minutes each month.

Another one of John's passions is helping people save $80 per month by axing their expensive cable subscriptions and replacing them with more affordable ones, like Hulu with Live TV.

Latest posts by John Schmoll (see all)


  • Laurie @thefrugalfarmer says:

    Terrific post, Matt. It’s got me feeling a lot less anxious as Rick and I educate ourselves and prepare to start investing – thank you!

  • Jake @ Common Cents Wealth says:

    This is a great post. I tend to worry about a lot of things out of my control If I were to only concentrate on what I could control this would alleviate a lot of my stress and give me more time. I just hope to get the market return over the next 40 years, so I’m not expecting too much. Now I just need to work on my savings rate…

    • Matt Becker says:

      Yep, savings rate is pretty critical. If you can just keep contributing, sticking with your principles and ignoring the noise, you’ll be in great shape in 40 years.

  • Brian @ Luke1428 says:

    Great points Matt! I don’t invest in anything that will not allow me to sleep well at night. Having a plan and staying focused on that plan are keys to making this happen.

    • Matt Becker says:

      “I don’t invest in anything that will not allow me to sleep well at night.” I think that’s a great philosophy! If you have a solid plan you should be very comfortable with everything. It shouldn’t keep you up at night. If you’re overly worried then it’s really time to re-evaluate what you’re doing.

  • pauline says:

    I am pretty diversified in real estate but don’t have a big stock allocation. I don’t like the market very much. The only thing I have are trackers with a monthly deposit to dollar average. That takes care of the stress of investing.

    • Matt Becker says:

      Sounds like a solid approach for handling your stock investments. Real estate is something I’m definitely interested in looking at in the coming years.

  • Greg@Thriftgenuity says:

    Very sound advice. Keep putting as much in as you can, stay diversified so you don’t live and die by certain investments’ ups and downs, and remember to reallocate when necessary. Like you say, need to invest, but also have to sleep at night.

    • Matt Becker says:

      Sleeping at night is good. As not hurting yourself by focusing on the wrong things. Simplicity is actually a beneficial thing.

  • JC @ Passive-Income-Pursuit says:

    The majority of investors would do best by sticking with the lowest cost index funds they can find and set up a automatic investment schedule to dollar cost average into positions. The next step? Don’t check your accounts except for quarterly at the most frequent, annually at the least frequent. Many investors lose out on returns because they let emotion get the best of them causing them to buy high and sell low. That’s why the average mutual fund earns about 10% per year over the long-term but the average investor earns much lower, I think around 2%.

    Savings rate and investment costs will be the biggest driver of your portfolio, especially early on. Personally I like to pick stocks because I want to focus my investments the best place I see fit. Although I really enjoy researching stocks and following companies so it works for me. If I tire of that then I’ll be switching most to index funds. Although I really dislike mutual funds, even index funds, for the fees they charge. Actively manged funds make no sense to me since they carry higher expense ratios.

  • Matt Becker says:

    The gap between mutual fund returns and actual investor returns is pretty large. Different studies seem to have it anywhere from 2.5-6.5%. That’s pretty crazy!

    A good index fund won’t charge you more than 0.2% in fees, and there are many that are less than 0.1%. Tax-efficiency is high and turnover is low. There are definitely bad ones, but they shouldn’t all be lumped together.

  • thepotatohead says:

    The market is so irrational. You will literally give yourself ulcers if you try and time its every move. Sometimes it is best to just go with the flow of things. Not saying that you shouldn’t actively watch your portfolios, but like you said, most of it you can’t control so you shouldn’t be stressing every seconds of the day about it.

    • Matt Becker says:

      I think it’s useful to watch your portfolio so that you can stay on top of when it’s time to rebalance, which should be based on rules set ahead of time. But if you’re trying to shift things around based on what you think the coming market trends will be, that’s a recipe for failure.

Leave a Reply

Your email address will not be published. Required fields are marked *