One of my passions is bodybuilding, and I make it a priority to make healthy choices. I go to the gym on a regular basis and eat a healthy diet – as long as you don’t count my bacon cheeseburgers and chocolate milkshakes at Five Guys. As an investment advisor and bodybuilder, I see many similarities between investing and exercising. For example, a recent study found that nearly 54% of Americans get the recommended amount of exercise. Coincidentally, 54% of Americans also invest in the stock market. The similarities between investing and exercising don’t stop there. You may not realize that you can learn a great deal about investing by applying the keys to success in the gym.
Do Your Homework (or Pay Someone to Do It for You)
In order to get results at the gym, you must know how to use the equipment. Using a weight machine the wrong way or for the wrong purpose can be ineffective at best and dangerous at worst. Unless you use a personal trainer, you will need to learn about exercise and nutrition to achieve the results you desire. Investing is similar in that you must either learn about retirement funds, investment strategies and planning or hire an investment advisor to do most of the work for you. Either way, it is important to understand the tools you are using to ensure they will deliver the results you desire. Do your homework and build your investment strategy wisely.
Results Take Time
We all know a consistently healthy diet and exercise will eventually make you more fit and help you lose weight. We also know these results don’t happen overnight. You must put in the work every day and even then, you may not see results for six to eight weeks. Investing is similar in that you must put in the effort to consistently watch your spending, save well and invest wisely. You have to be diligent in saving a certain amount of each paycheck and periodically review your investing strategy and retirement goals. The results from this work will most likely not be seen in several weeks but rather over a matter of months and years. Keep in mind that you are invested for the long-term and that patience is key to success.
There are No Shortcuts
If you hang out at the gym long enough, you will inevitably hear “secret, guaranteed” weight training or weight loss tips. You may hear about things like over-the-counter diet supplements, fad diets or five-minute abs that advertise immediate results but are actually unrealistic. Unfortunately, there is no shortcut to instant success. You have to do the work consistently over time to get the results. Investing is similar in that you may hear about a hot stock tip that is “guaranteed” to skyrocket overnight. It is tempting to believe that you can simply invest a lot of money in that one stock or in an actively managed fund (where the pros will trade on these hot stock tips for you), and you will be wealthy in no time. However, just like at the gym, there are no shortcuts in investing. Hot stock tips are generally given about companies that are highly volatile and exciting. They can swing down as much as up. Instead, your best bet is to invest in a well-diversified portfolio of “boring” low-cost index funds. Ignore the “sure-fire shortcuts” and stick with your investment plan.
Don’t Expect Perfection
At the gym, there are days when you will post a new personal best when it comes to lifting weights or running farther and faster. There are also days when you will feel slow, tired and sluggish. Investing is the same – the market has good days that make you feel quite satisfied. Unfortunately, it also has downturns that are unpredictable and sometimes quite painful. How you react to these setbacks is the key to how successful you will be in both exercising and investing. Clearly, you can always choose to panic and give up. It’s easier to sit in front of the TV rather than go to the gym. It’s also easier to keep your money in an extremely safe savings account earning very little interest rather than watching the balance drop when the market drops. A popular study by BlackRock researched the performance of a hypothetical $100,000 investment in the S&P 500 Index over the 20-year period from Jan. 1, 1999, to Dec. 31, 2018. It showed that an investment for the entire time period would have accumulated $298,293, while an investor who missed just five of the top-performing days during that period would have accumulated just $197,886. If you “give up” on the market and miss these important days, you could risk missing out on important gains. There are many “up” days in the markets. But expect that there will be setbacks and down markets as well. Take them in stride and stay focused on the long-term, knowing you will be successful eventually.
You can be successful at both investing and exercising. While these two activities are obviously very different, the keys to success are much the same. FBN
By Glenn Leest
Glenn Leest is a local investment advisor at WT Wealth Management located at 809 W. Riordan Road, Suite 206 in Flagstaff. You can contact Leest for a no-cost consultation at 928-225-2474 or at GLeest@wtwealthmanagment.com.