I was recently enjoying a conversation with a new friend. Despite my best efforts to sound normal and busy, this person eventually figured out that my wife and I don’t actually do enough paid work to sustain the normal middle-class life we seem to lead. From here he pried out the fact that I am Mr. Money Mustache, the freaky magician who retired at 30. When people learn this, they immediately start grilling me on my presumably amazing investment skills. You have to be a stock market wizard to retire unusually early, don’t you?

Unfortunately, I have a pretty poor investment record myself: as an early twentysomething I thought I could pick winning stocks, and ended up buying some that went to nearly zero. These were balanced by some that went up nicely, and these experiences combined to average out to about the same return the stock market as a whole would have given if I had just bought a nice index fund. Through my later 20s and 30s, I thought I was wise by squirreling lots of money away in the excellent Vanguard 500 (VFINX) index fund. But then Great Recession happened and (temporarily) backed out all those gains. I did make some reasonable money from home ownership and managing a rental house, but most of that was earned by increasing the value of the houses with old-fashioned sweat equity: renovations I did myself. In investments, you will win and lose on average, and statistically the best you should expect is to match the market (historically about 7-8% annually after inflation is subtracted out).

But let’s hypothetically say you were a masterful investor. The best investor in modern history, Warren Buffett, has averaged investment returns of about 20% per year for over 40 years. This is about 4 times higher than the laziest investor who just bought guaranteed-return bonds.

Now let’s say you are a masterful middle-income saver: you are married and you and your spouse earn $120,000 combined per year – say $90,000 after tax. With skill, the two of you can save at least $50,000 per year of your combined income between regular and retirement accounts.

Next, compare this with the average personal savings rate in the US:

– 6% right now (which is actually higher than usual because we are in a recession),

– as low as 1% during the big credit and spending boom of the mid-2000s.

An average couple would save less than $5000 per year.

So the difference between average and amazing investors is 4-to-1.

The difference between average and Mustache-level SAVERS is at least 10-to-1!!

So over the short time horizon we are talking about (7-10 years to retirement), you’ll get much better results by learning from this Blog (working on your spending), than you will by trying to be a fancy market-beating investor. That’s why I often repeat the message of “just pay off all your debts, than start throwing it all into the Vanguard index fund”.

Sure, it will go up and down with the broad stock index, but these are your retirement savings. You’ll be living off of them for the rest of your life and while we can’t predict the future, we CAN choose the statistically best place to get a high long-term return. And that place is in a low-fee index fund.

Also, by wiping out your debt (including mortgage) early on, you are effectively investing in some guaranteed bonds: paying off a 5% mortgage guarantees you a 5% return forever*. With no mortgage or other loans, my family’s fixed costs are only a tiny fraction of what the typical indebted person needs to pull in. So there is lots of flexibility in when to sell off portions of the index fund for future living expenses. And the dividend checks keep coming every quarter, rain or shine.

Back to the point: by concentrating on SAVING rather than minute details of investing, you are stacking the odds in your favor while also freeing up time for the real deal – maximizing your fun in a cash-efficient way.

* Although this is not an inflation-adjusted number, since if you leave your mortgage unpaid forever, the remaining balance will eventually deflate away to a very small number relative to the cost of other things. In other words, you may be able to pay off your $150,000 mortgage when you’re 100 with just the change in your wallet. But even 5% before inflation is still a good guaranteed return with today’s treasury rates. Cautious people like me are still wise to pay off their mortgages early.