Opening ceremonies for the summer Olympics are set for Friday, July 23rd at Olympic Stadium in Tokyo. Individuals and teams from all over the world will compete for the coveted gold, silver, and bronze medals. Reaching the pinnacle of one’s sport takes enormous commitment, effort, and persistence. Likewise, reaching your ultimate financial goal requires commitment, effort, and persistence.
1) Develop a “training” plan. A step-by-step plan of what you need to do to achieve your objectives can help you maintain discipline. Clearly defined milestones can help measure progress along the way. This is as true for building wealth as it is for, say, an elite female gymnast tracking her accomplishments against her goals. In either case, goals help assess if you are on track.
2) Start early. While there are exceptions, most elite athletes begin when they are relatively young and train for years to reach the top. Megan Rapinoe, of the U.S. women’s soccer team, began playing soccer at age 3. Similarly, if you start saving early, you can develop better financial habits and increase the potential to reach your ultimate wealth goals. The longer your time frame, the more powerful the compounding effect (profits earned on savings are reinvested, and they themselves generate interest and investment gains in the future) is.
3) Be consistent. To reach the peak of athletic success, one must train with a high degree of regularity and focus. Time off for R & R is acceptable within parameters. When it comes to your wealth plan, it may be tempting at times to go for an indulgent purchase or even change your plans dramatically when the market is volatile. Big detours like that, however, can significantly affect your ability to reach your goals. This does not mean that athletes should never rest, or that you cannot splurge on something once in a while. But any deviation or big purchase must be done with a full understanding of how it impacts your overall plan.
4) Expect the unexpected. Consider the athletes who spent four years training for the Olympics – only to have the games postponed for a year. Or perhaps an athlete suffers an injury right before a major competition. Athletes often have to adjust their plans due to an unexpected event. In the financial world, the market might take a downturn, or you could have a large emergency expenditure. Your plan needs to be flexible and adaptable to ever-changing circumstances.
5) Find a great coach. An athlete might have all the skills and talent to succeed, but without an expert coach, it will be more difficult to achieve his or her goals. Likewise, you may have the ability to accumulate significant assets, and you may genuinely enjoy some aspects of investing and organizing a wealth plan on your own. Successful wealth management is a full-time job, however, that requires dedication and specialized knowledge that is available from a coach who has your best interests in mind.