Olympic Games typically end with the marathon run. It is considered to be a very important event that tests the resolve of the athletes. Marathons are considered to be among the toughest of the sports. While another similar and very popular field sport - the 100 meter run, requires a mix of speed and power; a marathon requires effective conservation of energy to sustain the run, and the stamina to stay put till the end.
While a professional marathoner tries to win the race, an amateur considers even finishing the race as an achievement. Marathoners often try beating their own previous record, but winning is seldom the objective. If we compare a marathon to investing, several lessons, rules and disciplines intersect - you can actually compare making investments with running a marathon. This could be how:
Lesson 1: To succeed in the long run, you got to survive in the short term
Most of us invest to fund our long term financial goals. In order to achieve those goals, your investment portfolio must have the potential to build wealth and help you fulfill those goals. However, in the light of long term goals, you cannot tend to ignore the short term needs. For short term goals/needs, you could build a contingency fund that would suffice to meet immediate term requirements. The contingency fund could also help in case of a medical emergency or other unforeseen circumstance. However, completing a race is more about being able to strike a balance between the bouts of energy required to survive shorter intervals and the stamina to sustain till the end. Exactly in the same way, one needs to take care of the expenses of life in the immediate term as well as save and invest enough to be able to meet the long term needs.
Lesson 2: Run light
It is always better to run with minimum load on the body. This additional load can sap one of critical energy. Back in the world of investments (or life goals), the excess weight on your portfolio is nothing but various liabilities that tend to weigh you down; medical, social or financial. These liabilities could create a drag on your personal finances. Your liabilities would require you to maintain liquidity in the portfolio to meet the obligations and would hamper the consistent growth of the portfolio. Thus, to ensure that your portfolio keeps growing with time, keep intermittent loads at bay.
Lesson 3: Break the race in small distances
Full marathon is little more than 42 kms, whereas half-marathon is a bit over 21 kms. Thinking of these distances as a whole number is intimidating. Hence, it is easier to cover the distance, kilometer by kilometer - running for the first one kilometer and then finishing the whole race by breaking it into smaller segments. You can do so with your long term investments, too. Many of life's goals such as child's education, retirement etc seem intimidating in the beginning as they tend to be big numbers to save for. However, if you save and invest a fixed amount regularly without fail, into financial instruments such as mutual funds etc, such long term goals could be achieved.
Lesson 4: Rough roads are followed by smoother ones
A marathoner's path is not a rosy one. Many times, the marathoner has to run through uneven, sloped, and rough roads. More often than not, their test of endurance is how effectively they pass each such obstacle with determination. It's a huge challenge. But however, what follows after such tests is an often a slope to climb down, or a panel of cold water sprinkles, which makes the effort worthwhile. In investing parlance too, there will be several such testing times where you may have to cut down on several expenses to ensure that a certain investment made towards a long term goal, doesn't get deterred - but that only ensures that the goal is effectively saved for.
Lesson 5: What is the goal?
For a professional marathoner the goal might be to win the race, but for the amateur marathoner, the finishing it is success enough. It does not really matter whether someone else runs faster than you as the real winner is the one who sustains till the end and has time in his favour. In the matter of personal finance too, it does not matter if someone else's portfolio has outperformed yours in the short term - for all you know, their goal might have been a different one, or their risk appetite may have been higher. Just ensure your investments are aligned to your long term goal.
Lesson 6: Do not give up
A marathoner doesn't start the race without the determination to finish it. To succeed in the long run, you must be strong-willed and focus on your goal. Giving up after a setback will just deter your confidence and turn you against your own interests. Ditto for personal finance. There are many instances when investors have exited their positions due to market volatility, personal needs or poor market conditions. When in fact, it could be an opportunity to the portfolio and not stop it. Giving up is harmful in the long run - for your race and your money.
Please keep in mind that the investments are made to achieve life's goals. Life is a lot more important than investments. Enjoy life. Let the investments help you the live the life of your dreams.
CL03340
While a professional marathoner tries to win the race, an amateur considers even finishing the race as an achievement. Marathoners often try beating their own previous record, but winning is seldom the objective. If we compare a marathon to investing, several lessons, rules and disciplines intersect - you can actually compare making investments with running a marathon. This could be how:
Lesson 1: To succeed in the long run, you got to survive in the short term
Most of us invest to fund our long term financial goals. In order to achieve those goals, your investment portfolio must have the potential to build wealth and help you fulfill those goals. However, in the light of long term goals, you cannot tend to ignore the short term needs. For short term goals/needs, you could build a contingency fund that would suffice to meet immediate term requirements. The contingency fund could also help in case of a medical emergency or other unforeseen circumstance. However, completing a race is more about being able to strike a balance between the bouts of energy required to survive shorter intervals and the stamina to sustain till the end. Exactly in the same way, one needs to take care of the expenses of life in the immediate term as well as save and invest enough to be able to meet the long term needs.
Lesson 2: Run light
It is always better to run with minimum load on the body. This additional load can sap one of critical energy. Back in the world of investments (or life goals), the excess weight on your portfolio is nothing but various liabilities that tend to weigh you down; medical, social or financial. These liabilities could create a drag on your personal finances. Your liabilities would require you to maintain liquidity in the portfolio to meet the obligations and would hamper the consistent growth of the portfolio. Thus, to ensure that your portfolio keeps growing with time, keep intermittent loads at bay.
Lesson 3: Break the race in small distances
Full marathon is little more than 42 kms, whereas half-marathon is a bit over 21 kms. Thinking of these distances as a whole number is intimidating. Hence, it is easier to cover the distance, kilometer by kilometer - running for the first one kilometer and then finishing the whole race by breaking it into smaller segments. You can do so with your long term investments, too. Many of life's goals such as child's education, retirement etc seem intimidating in the beginning as they tend to be big numbers to save for. However, if you save and invest a fixed amount regularly without fail, into financial instruments such as mutual funds etc, such long term goals could be achieved.
Lesson 4: Rough roads are followed by smoother ones
A marathoner's path is not a rosy one. Many times, the marathoner has to run through uneven, sloped, and rough roads. More often than not, their test of endurance is how effectively they pass each such obstacle with determination. It's a huge challenge. But however, what follows after such tests is an often a slope to climb down, or a panel of cold water sprinkles, which makes the effort worthwhile. In investing parlance too, there will be several such testing times where you may have to cut down on several expenses to ensure that a certain investment made towards a long term goal, doesn't get deterred - but that only ensures that the goal is effectively saved for.
Lesson 5: What is the goal?
For a professional marathoner the goal might be to win the race, but for the amateur marathoner, the finishing it is success enough. It does not really matter whether someone else runs faster than you as the real winner is the one who sustains till the end and has time in his favour. In the matter of personal finance too, it does not matter if someone else's portfolio has outperformed yours in the short term - for all you know, their goal might have been a different one, or their risk appetite may have been higher. Just ensure your investments are aligned to your long term goal.
Lesson 6: Do not give up
A marathoner doesn't start the race without the determination to finish it. To succeed in the long run, you must be strong-willed and focus on your goal. Giving up after a setback will just deter your confidence and turn you against your own interests. Ditto for personal finance. There are many instances when investors have exited their positions due to market volatility, personal needs or poor market conditions. When in fact, it could be an opportunity to the portfolio and not stop it. Giving up is harmful in the long run - for your race and your money.
Please keep in mind that the investments are made to achieve life's goals. Life is a lot more important than investments. Enjoy life. Let the investments help you the live the life of your dreams.
CL03340
( Originally published on Jul 22, 2016 )
