There was once a Greek messenger named Pheidippides that was given an important task in 490BC. He was sent from the battlefield of Marathon to Athens to announce that the Persians had been defeated, a total distance of 26 miles and 385 yards. Recognising the importance of his task, he ran the entire way promptly announcing the news on his arrival before collapsing and dying. Modern Olympics founder Baron Pierre de Coubertin recreated this long-distance run as part of the Modern Games in Athens in 1896. A year later, the Boston Marathon was born, and the rest is history. Over 1 million runners participate in marathons worldwide every year, and seasoned marathoners train to participate in at least one marathon per year.
Completing a marathon is a long-term goal and needs to be approached in the same way as any other long-term goal would be – by planning a strategy and instilling the discipline to stick to that strategy. We all have different long-term goals in all aspects of our lives – for many people, the ultimate financial goal is a comfortable retirement. Retirement means different things to different people, but we can all agree that financial freedom and stability are at the heart of everyone’s definition of retirement. Similar to marathon running, this long-term goal requires preparation, planning, persistence and discipline.
Marathon runners will tell you that thinking about running 26 miles is very overwhelming, but looking at it in manageable chunks, five miles at a time, for example, is a lot more tangible, and to celebrate – see our article on celebrating the small wins– the accomplishment of each mile. Start small and know your pace. Understand what pace works for you and don’t overdo it during the first five miles – look at your monthly spending and see if there is money left at the end of the month or month left at the end of your money. Develop a training plan or budget that you can stick to, and work towards that. Be sure to eat enough carbs to fuel your runs, running out of energy mid-way through a run is not going to get you far. Not being able to afford an unexpected expense isn’t going to get you far either. Save up for emergencies – aim for that buffer of three to six months of expenses to get you through the extra mile when you need it. Once you pass that five mile mark and reach your emergency fund goal, you will feel really good about yourself. You’ll realise the progress you’ve made toward your plan and start to prepare yourself for the next steps.
Marathons are run on roads, meaning that the 26-mile journey is not going to be along a perfectly paved flat surface and you may encounter some potholes or hills as you go along. You may also be running against the direction of the wind, which will make you feel like you’re being pushed backwards. Once you’ve reached the emergency fund level of cash and you enter the stock market, you will quickly learn that the investing marathon is run on similar terrain. There is no way to avoid the hills that are en route or the volatility the stock market will present to you, but you can prepare for this by following a diversified plan to prepare you for less-than-ideal conditions. Training for hills will prepare you to pace yourself once you are faced with one. Holding a good mix of assets in your portfolio will prepare you for stock market tumbles and help you recover from them more efficiently without deterring you from your goals. The further on in a race you are faced with a hill the climb, the bigger the strain on the body. This is normal – you are far more tired at mile 16 than you were at mile 7. It is therefore important to keep hydrated during the race to make sure you are properly fuelled for what’s ahead. Similarly, you will have a lot less tolerance for adverse conditions the closer you get to retirement, and therefore you may need to adjust your investments accordingly. You will start to realise the importance of preparation and planning the closer you get to the finish line.
The last stretch of road before reaching the finish line is normally the part where you hit the wall – you may have been running now for almost four hours, your feet are tired, and you’re mentally exhausted, tired out from working. At this point, you are not sure how you would still be moving forward if it wasn’t for autopilot. Autopilot wouldn’t be happening if it weren’t for all the training you did to get to this point, and retirement wouldn’t be more than an unrealistic dream if it wasn’t for all the saving and planning you did in your earlier working days. The major motivating factor now is what happens once you’ve finished the race – have you made a post-race plan? Have you thought about how you are going to care for your muscles or how you are going to manage your cash flows in retirement? Have you considered adjusting your training plan to ease back into running and how you are going to spend your time in retirement?
Our two cents: It’s not about how fast you get there, it is about getting there. Think of your long-term goal as the accumulation of many smaller shorter-term goals and celebrate each one. Create a plan that is flexible enough to change according to obstacles or changes along the route, and robust enough to get you to your end goal. Speak to us at Black Swan Capital and we can help you create this plan and guide you toward the finish line.