It’s hard to believe it has been five years since the last summer Olympics, and we’ve had an extra year to break out some of our best sports analogies. With that said, what do you have to do to achieve gold?
The best bet, and we’ve asked all the experts, is to be Simone Biles.
However, we recognize almost none of our readers are Simone Biles. But that doesn’t mean we can’t take some lessons from the different athletes who do compete at the highest level.
Gymnastics, swimming and track: diversify
Most people probably don’t recall Michael Phelps taking the silver or Simone Biles taking the bronze in 2016. Why? They won a boatload of gold medals to go along with them.
Your goal isn’t to make tons of money on any particular investment, but to have money when you retire. It is often the case that people are over-reliant on tax-deferred accounts, such as 401ks, or Social Security, or even a piece of property they hope will appreciate. If you don’t put all your eggs in one basket, it will be less impactful if one of your investments performs beneath expectations.
Distance events: pace yourself
When you were a kid, did you ever watch a marathon and wonder, why aren’t they going faster? Of course, now the answer is obvious. If you try to sprint your way through a long-distance race, you’ll be out of gas one minute into it.
When it comes to your finances, knowing where the finish line is can help your properly calculate your risk. In the early going of your retirement, you can be more aggressive, as you will likely be able to endure the ups and downs of the markets. But that doesn’t mean you should throw money at risky stocks. Similarly, you should be more conservative as you near retirement, but that doesn’t mean you can just throw your money under the pillow and call it a day.
Basketball: know your squad
When you work with a financial advisor, you are working with a team of people who are professionals in their various fields. Your advisor will generally be the “face” of your investment strategy, but knowing who the planners, tax experts etc. to whom he will be passing the ball can give you the context help you understand how your finances are being handled.
Equestrian events: get back in the saddle
When you ride horses competitively, falling comes with the territory. Equestrian competitors even wear emergency vests to help prevent severe injury. At some point in your financial journey, bad things are going to happen. An investment won’t go the way you hoped, you’ll have a costly health event, or you’ll experience job loss.
It can be easy to give up on your investment strategy, but that guarantees you’ll miss the podium entirely in retirement. Don’t give up or make panic decisions. Remember, you only lose money on a stock if you sell it at a loss. Similarly, make sure your “emergency vest” is well stocked for a rainy day.
See you at the closing ceremonies!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
All investing involves risk including loss of principal. No strategy assures success or protects against loss.
This article was originally published in the Pioneer Press. You may view the article here.