By Jonathan Theunissen, CFP ®

When clients think about building wealth through investing, one of the first questions they ask is: “What return can I expect?”

But here’s the truth that decades of research has shown: consistent contributions – your behaviour – matter more than investment returns over the long run.

This isn’t just theory. It’s backed by hard evidence, both globally and here at home.

A simple example

Let’s compare two hypothetical South African investors investing over 20 years:

• Investor A contributes R3,000/month, earning a moderate return of 7% per annum.

• Investor B contributes R1,500/month, but achieves a stronger return of 11% per annum.

• Both increase contributions by 6% annually to adjust for inflation.

After 20 years:

• Investor A ends up with +- R2.46 million

• Investor B ends up with +- R1.83 million

Despite earning 4% more per year, Investor B doesn’t catch up with Investor A – because regular, higher contributions compound more effectively over time.

Behavioural Gaps: Global Evidence

Global research highlights that investor behaviour, not fund performance, is the main reason for underperformance.

Research from Dalbar and JP Morgan highlights that investor behaviour often undermines returns. According to Dalbar’s 2023 Quantitative Analysis of Investor Behaviour:

• The average equity fund investor earned 6.81% annually over 30 years, compared to the S&P 500’s 9.65%.
• The gap is largely due to poor timing, emotional reactions, and inconsistent contributions.

A 2022 Morningstar report across European, UK, and Australian markets found that investors earned 0.9% to 1.7% per year less than their funds due to poor timing decisions – such as stopping contributions during downturns or switching out of underperforming funds prematurely.

The Barclays Global Wealth Insights Report (2020) found that “investment success is more closely tied to behaviour than returns.” It highlighted that high-net-worth individuals who stuck to disciplined, regular investment strategies tended to outperform those who frequently tried to time markets or chase high returns.

Closer to home, Allan Gray found in a long-term study of their Balanced Fund that:

“Investors who simply stayed invested and contributed consistently earned significantly more than those who tried to time their entries and exits – even in periods of market volatility.”

The Financial Services Conduct Authority (FSCA) in South Africa echoes this in its consumer education reports: investor choices, such as panic-selling or reducing contributions during tough markets, are major obstacles to long-term growth.

Furthermore, the Association for Savings and Investment South Africa (ASISA) has noted in multiple annual reviews that investor returns are often lower than fund returns, due to suboptimal behaviour – particularly irregular contributions, fear-driven withdrawals, and switching funds unnecessarily.

Consistency Beats Timing

In the Behavioural Finance Survey (2022) conducted by Ninety One, South African advisers reported that investor behaviour – especially stopping contributions during downturns – is one of the biggest destroyers of wealth over time.

Globally, the UK’s Royal London Asset Management also reported in a 2018 whitepaper that investors who stayed invested and continued contributing through the 2008 and 2020 crises saw 50 – 70% higher balances a decade later than those who paused contributions or exited the market.

A Real World Analogy

Think of investing like filling a JoJo water tank from your roof’s gutters.

Your contributions are the rainfall.

Your returns are the slope of the gutters and how efficient they are in collecting water.

Even with perfectly engineered gutters (great returns), if there’s little or no rainfall (low or irregular contributions), your tank will never fill. But with steady rainfall – even if the gutters aren’t perfect – the tank fills over time.

Why This Matters for You

You can’t predict what markets will return over the next year.

But you can decide to invest a set amount every month – rain or shine.

Your contributions compound over time and smooth out volatility.

Waiting for “the perfect time” or stopping when markets dip hurts you more than market declines themselves.

The Controllable Wins

Investment returns matter but they’re unpredictable and largely outside your control.

Your behaviour, however – how much and how often you invest – is fully within your control.

The size and consistency of your effort outweighs the luck of market timing.

Final Thought

At Galileo we place a strong emphasis on helping clients maintain consistent, disciplined investing habits – because this is the most reliable path to long-term wealth.

At the same time, we recognise that portfolio construction really matters. That’s why we dedicate significant time and expertise to designing evidence-based investment strategies that aim to deliver strong long-term returns at the lowest possible cost. We do not chase fads or speculate – we build portfolios grounded in research, designed to support your financial goals under all market conditions.

For more articles by Jonathan Theunissen, click here.