Subscribe

Like exercise, long-term investing requires persistence and patience

Just like working out, investing requires the same kind of long-term view in order to achieve financial goals. 

  • close
    Michael Anderson trains for the Boston Marathon during a snowstorm in Hoboken, N.J. (Jan. 23, 2016). Just like working out, investing requires the same kind of long-term view in order to achieve financial goals.
    Julio Cortez/AP/File
    View Caption
  • About video ads
    View Caption
of

As a lifelong exerciser, I know how important consistent physical activity is to one’s health. And as a financial advisor, I see how this concept parallels the benefits of developing and committing to a long-term investing strategy.

I’m far from a fitness nut, but keeping physically active is a major part of what keeps me out of the doctor’s office and feeling great when I get out of bed. And it’s always been a part of my life. As a kid, I played baseball, basketball and volleyball. In college I played several intramural sports. Today, I do a lot of walking and hiking, some yoga and strength training, and a sprinkling of running.

Working out on the treadmill recently, I realized that the advice I give clients on long-term investing is a lot like the advice I’d give someone about long-term exercise. Over the years, I’ve observed three main similarities:

Sometimes, it’s no fun

Everyone knows that exercise is good for you. But let’s face it, sometimes it stinks. For me, on February mornings when the alarm goes off at 5:25, my warm bed beckons me to hit the snooze button and hibernate for another hour. On those mornings, I’m not very chipper as I stumble out of bed to put on my workout gear.

But, invariably, once I’m up and moving, and my blood is pumping, I end up feeling much better than if I’d surrendered to the siren song of my cozy sheets and blankets.

You also know that being a long-term investor in stocks really stinks sometimes. Just recall the first week of this year when the Dow dropped 1,000 points. At times like this, it can be very tempting to surrender to the siren song of “playing it safe” and jumping out of the market. But, like exercise, staying with it for the long haul will always pay off far more than giving up because of the short-term discomfort.

Aggressive short-term strategies often don’t work.

As a kid, I didn’t realize what a gift it was to have a young body. I could take a few months off from regular exercise and then decide I was going to get back in shape. I’d hammer it for a few months in the gym and easily get back to feeling how I wanted to feel.

Now that I’m firmly into my 40s, I’ve experienced what over-exertion can do to my body, from trips to the chiropractor to months of recovery after weekend-warrior activities. I’ve learned my lesson: Pacing myself is key.

Just like there are no “get fit quick” schemes, there are no “get rich quick” schemes for investors. I learned some hard lessons early on as investor. Thinking I was going to make a quick buck, I poured money into technology stocks late in 1999. I realized in retrospect that I was jumping in at the height of the historic tech bubble that saw the Nasdaq fall 78%from its peak during the dotcom crash.

That was short-term thinking. Instead, choose tried-and-true, long-term investing strategies so you don’t hurt yourself in the process.

Diversification matters.

I have gravitated toward a mix of cardio exercise with yoga and some light work with free weights. This combination helps me with endurance, flexibility and strength. As a result, I’m ready for anything life throws my way, whether it’s a hiking trip with my family, playing football in the yard with my daughter on weekends, or performing in my daughter’s dance recital each year.

Similarly, it’s important to have a diversified investment portfolio that is ready for any opportunities or threats that the financial markets may throw your way. Some asset classes respond better in times of high inflation and some work well in periods of low inflation. Some investments work well when interest rates are increasing and others outperform when rates are falling. And at any one time across the globe, some countries are growing faster than others.

Mix up your investments just like you mix up your workouts so you’re prepared for any market situation.

The bottom line

What it takes to reach our fitness and investing goals is similar. We must be diligent about how we work out and how regularly we exercise. With our investing strategy, we must maintain a diverse selection of investments and a long-term perspective. This can be hard work on both accounts. And though hard work isn’t always fun, it’s rewarding. Ultimately, we must stay committed to what it takes to reach our goals — even when it stinks!

This article first appeared at NerdWallet. Learn more about Dave Rowan on NerdWallet’s ‘Ask An Advisor.'

The Christian Science Monitor has assembled a diverse group of the best personal finance bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link in the blog description box above.

About these ads
Sponsored Content by LockerDome
 
 
Make a Difference
Inspired? Here are some ways to make a difference on this issue.
FREE Newsletters
Get the Monitor stories you care about delivered to your inbox.
 

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...

Save for later

Save
Cancel

Saved ( of items)

This item has been saved to read later from any device.
Access saved items through your user name at the top of the page.

View Saved Items

OK

Failed to save

You reached the limit of 20 saved items.
Please visit following link to manage you saved items.

View Saved Items

OK

Failed to save

You have already saved this item.

View Saved Items

OK