If you think investors are rational, consider the following dilemma.
An investment portfolio's growth is driven by how much we save, how long we invest, what return we earn and how much of that return we surrender to investment costs and to taxes. Think of this as your formula for investment success.
We have an enormous amount of control over every factor in the formula, except one. So guess which factor consumes most of our energies?
Yup, you've got it.

Investors spend an absurd amount of time trying to control the one think they can do the least about, which is their raw investment performance. They attempt to pick hot stocks, find star fund managers and guess the market's direction. Yet it is extraordinarily difficult, if not impossible, to do any of these things.

"People focus their energies purely on their rate of return, and not on areas where they can make a difference," says Art Canter, an investment adviser in Boca Raton, FL.
Maybe it isn't surprising that we devote so much time to boosting our raw returns. After all, it is a critical ingredient in our investment success.

Just because it is critical, however, doesn't mean we can do much about it. The reality is, we can help our portfolio's growth far more by increasing savings, investing longer and cutting investment costs and taxes. "You need to maximize each of those to their full potential," says Richard Van Der Noord, a financial planner in Macon, GA.

You might turn time to your advantage, by both starting to save earlier and also delaying the eventual expenditure. Consider, for instance, what happens if you put off retirement for a few years. First, you have longer to save. Second, your savings have time to earn additional investment gains. Finally, you shorten your expected time in retirement.
Similarly, you could crank up the amount you save each month and cut costs, by favoring mutual funds with lower annual expenses and using a discount broker when buying individual stocks. "Most of us, if we really got serious about it, could increase the amount we save," Mr. Van Der Noord reckons.

He adds that there is plenty of room to eliminate the drag from taxes, by making full use of tax-deferred savings accounts like 401(k) plans and individual retirement accounts. "Ironically, the area where people feel they have the least control, taxes, is where they have the most control," he says.

Investors may also be able to bolster their raw investment returns, but not in the way they think. Rather than trying to pick market-beating stocks and funds, investors could simply boost the percentage of their portfolio devoted to stocks. If you shifted from a mix of 50% stocks and 50% bonds to a portfolio that is 60% stocks and 40% bonds, you increase your expected annual return by maybe half a percentage point.

That small adjustment can make a huge difference to your eventual wealth, especially when combined with increased savings, more time and lower investment costs. 
How much are such changes worth? Imagine two investors who are saving for retirement during a period when stocks deliver 11% a year and Treasury bonds return 6%. Both investors are funding individual retirement accounts, so neither is paying taxes on each year's investment gains.

Our first investor saves $100 a month for 30 years. He keeps 60% of his portfolio in actively managed stock funds that levy 1.4% in annual expenses, close to the average for diversified U.S. stock funds. The rest of his portfolio, 40%, goes into Treasury bonds. Our first investor believes he can get an edge by picking superior stock funds.

Our second investor, meanwhile, doesn't have any confidence in his ability to pick superior funds, so he puts his stock-market money in a market-tracking index fund that charges 0.2% a year. Instead, our second investor focuses his energies elsewhere.

For instance, he decides to raise his stock allocation to 65%, with just 35% going into Treasury bonds. He also cranks up his monthly savings to $105, and he starts saving for retirement two years earlier, so that he has 32 years to invest.

Result? Our second investor has about $220,000 at retirement. To amass the same amount, our first investor would have to pick stock funds that, before expenses, beat the market's 11% return by more than three percentage points a year.

What are the chances that, for 30 years, our first investor could keep his money invested with managers who beat the market by that much? "Nil," Mr. Canter says. "There could be money managers who have done that over the last 30 years. But . . . that doesn't mean they'll do it again. Besides which, they'll probably retire."