A lot of times, investment success comes down to elementary lessons

September means a new school year, and we are reminded of the importance of teachers.

Investors tend to overthink things, yet simple formulas and basic math — like the lessons learned from our elementary math teachers — can lead to financial success.

Lesson 1: More time invested equals better returns.

The stock market goes up 73% of the time over a one-year period. The odds jump to 94% over a 10-year period. Too many investors focus on the shorter periods of decline, and money is lost trying to time them.

If your investment timeframe is long-term, play the odds and keep that money invested.

Lesson 2: Watch interest rates when paying down debt.

Roughly 60% of current U.S. mortgages have interest rates below 4%. Money market funds — at least before the Federal Reserve’s interest rate cut last week — still pay close to 5%, as do CDs and high-quality bonds.

Why pay down a fixed mortgage any faster than necessary when those dollars can earn more interest from conservative investments? In addition, if you itemize deductions, remember that mortgage interest lowers your taxes.

Lesson 3: Stocks usually have better long-term returns than cash and bonds.

Stocks historically produce annual returns around 10%; the annual return for bonds is about 5%, and savings accounts are closer to 1%.

The price investors pay for superior stock returns is enduring ugly stretches of volatility. Long-term investors should focus less on volatility and more on the long-term averages. Most will benefit by increasing their allocation to stocks.

Lesson 4: If you don’t have it, don’t spend it.

We all remember a homework question like: “If an apple costs $1 and Johnny has $5, how many apples can Johnny buy?” Johnny should not buy seven apples.

Lesson 5: Don’t forget mean reversion.

This one might require graduating to middle school math, but you might remember mean reversion. For years, growth stocks have outperformed value stocks. Large-caps have done better than small-caps.

And U.S. stocks have outperformed international. It is easy to dump underperforming assets and add money to the most recent winners. But it’s important to remember that returns tend to revert toward long-term averages.

Don’t give up on underperforming asset classes and remember the adage of buying low.

Lesson 6: Finance is about math, not political science.

While it is easy to manipulate data to support a narrative, the numbers show the stock market does not favor Republican or Democrat presidents. The mean annual growth rate of the market is higher with Democratic presidents while the median performance is higher under Republican presidents.

The bottom line: Allowing your political beliefs to drive your investment decisions is a bad strategy.

Lesson 7: Compounding is incredibly powerful; start saving as early as possible.

If you start investing $1,000 a month at age 40 and earn 8% a year, you will have about $957,000 by age 65 (after investing $300,000 during that time). If you instead invest $272 a month starting at age 25 and earn that same 8%, you will have about $957,000 by age 65 (after investing $130,080 over that time).

Lesson 8: Pay off high-interest rate debt first.

If you have three loans, one at 6%, one at 9% and one at 15%, prioritize paying down the 15% loan.

Some financial experts recommend prioritizing the lowest balance loan first, regardless of its interest rate, because of the emotional benefit you get from checking that financial box.

However, the theme of these lessons is to separate emotions from money. Trust the simple math you learned in elementary school.

Ben Marks is chief investment officer at Marks Group Wealth Management in Minnetonka. He can be reached at ben.marks@marksgroup.com. Brett Angel is a senior wealth adviser at the firm.