Are you too focused on your portfolio mix? Vanguard thinks so. Here are their 2 tips for building real wealth

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If you're trying to build wealth, you've probably spent some time deliberating over the "perfect" portfolio mix. Should you lean more aggressively into equities or ETFs? Can a small allocation to cryptocurrencies give you that lottery-ticket boost? What about commodities or gold? Or options?

Well, the secret to building wealth could actually be a lot simpler. That's according to research by investment giant Vanguard, which suggests that exclusively focusing on portfolio mix or investment returns may be a mistake if you're trying to get rich.

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Here are two factors highlighted in Vanguard's Principles for Investing Success (1) report that drive real wealth creation.

Time is a key factor: How much you save is a crucial factor for wealth creation, especially if you're investing for near-term goals. After all, time in the market often beats timing the market — as the adage goes.

According to Vanguard's analysis, the savings rate heavily outweighs the impact of investment returns for short- and medium-term goals. For instance, your savings can account for as much as 94% of your progress toward any investment target set within a two-year time frame.

For the medium term, the impact of savings gradually diminishes. But even for longer, 30-year time frames, the savings rate can contribute as much as 51% of the overall progress. In other words, if you're a 30-year-old worker planning for retirement in 30 years, the majority of your progress will be determined by how much you manage to contribute to your savings.

So, if you're like many people and struggling to save, you can start by building savings habits into everyday spending. With Acorns, you can automatically invest spare change from your everyday purchases into a diversified portfolio of ETFs managed by experts at leading investment firms like Vanguard and BlackRock.

For instance, if you buy a donut for $3.25, Acorns will round up the purchase to $4 and invest the change in a smart investment portfolio. So that sweet treat automatically becomes a 75-cent investment in your future.

Over a year, these round-ups can add up, but if you want more, Acorns also offers monthly account contributions so you can supercharge your savings.

Vanguard's report highlights several factors that contribute to wealth building over time, including cost control, gradually increased contributions, portfolio mix and investment returns. However, all of these factors can be simultaneously disrupted with a single panic-driven move.

To illustrate this, the investment giant studied the performance of two hypothetical investors during the COVID-19 downturn in 2020. One investor remained committed to their investment strategy and portfolio allocations through the downturn, while the other moved entirely to cash at the bottom of the downturn, only to reenter when the market started to recover just a few months later.

The disciplined investor who sailed through the panic enjoyed a 21% total return, while the investor who flew to safety had a -2% return by the end of the year.

Simply put, panic selling is like interrupting the power of compounding at the worst possible moment.

This lesson was once echoed by the legendary investor Warren Buffett. "Some people should not own stocks at all because they just get too upset with price fluctuations," Buffett told CNBC's Rebecca Quick (2). "If you're going to do dumb things because a stock goes down, you shouldn't own a stock at all."

If you're someone who struggles to control their anxiety during volatility, hiring a professional advisor could help. With Vanguard, you can connect with a personal advisor who can help assess how you're doing so far and make sure you've got the right portfolio to meet your goals on time.

Vanguard's hybrid advisory system combines advice from professional advisors and automated portfolio management to make sure your investments are working to achieve your financial goals.

All you have to do is fill out a brief questionnaire about your financial goals, and Vanguard's advisors will help you set a tailored plan, and stick to it.

With an experienced money coach by your side, it should be easier to sail through market turbulence and nerve-racking corrections with confidence.

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