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Financial Fitness: Investing is a marathon, not a sprint

One of the most compelling events at this year’s Olympic games in Rio de Janeiro, is the marathon, a 42-kilometre endurance contest with roots dating back to ancient Greece. The marathon can teach us much about life — and it certainly offers lessons for investors.

In fact, if you were to compare investing to an Olympic sport, it would be much closer to a marathon than a sprint. Here’s why:

Long-term perspective

Sprinters are unquestionably great athletes and they work hard to get better. Yet their events are over with quickly. Marathoners know they have a long way to go before their race is done so they have to visualize the end point. Successful investors, too, know that investing is a long-term endeavor and that they must picture their end results – such as a comfortable retirement – to keep themselves motivated.

Steady pacing

Sprinters go all out, every second and every stride. But marathoners have to pace themselves – too many spurts of speed could tire them out and doom their performance. As an investor, you, too, should strive for steady, consistent progress. Rather than attempting to rush success and achieve big gains by chasing after supposedly “hot” stocks – which may already have cooled off by the time you hear about them– try to follow a long-term strategy that emphasizes diversification among many different investments. Keep in mind, though, that while diversification can reduce the impact of market downturns that primarily affect one type of asset, it can’t guarantee success or prevent all losses.

Ability to overcome obstacles

When sprinters stumble or fall, they are finished for the race; there’s simply not enough time to recover, so they typically just stop. But over 40 kilometres, a marathoner can fall and — providing they are not injured — get up again, compete and possibly even win. When you’re investing for the long term, you have time to overcome “mishaps” in the form of market volatility. So instead of dropping out of the “race” and heading to the investment sidelines, stay invested in all types of markets. As you near retirement, and you have less time to recover from market downturns, you may need to adjust your portfolio to lower your risk level – but even then, you don’t need to call it quits as an investor.

Fueling

Sprinters have to watch what they eat. But world-class marathoners have to be ultra-diligent about their diets, especially in the period immediately preceding a race. Because they must maximize the oxygen their bodies use while running, they need a high percentage of their calories to come from carbohydrates, so they “carbo-load” when needed. When you invest, you also need to periodically “refuel” your portfolio so it has the energy and stamina needed to keep you moving forward toward your goals. And that means you must add dollars to those areas of your portfolio that need beefing up. Regular reviews with a financial professional can reveal where these gaps exist.

As investors, we can learn a lot from Olympic marathoners!

Deborah Leahy is an Investment Advisor with Edward Jones, Member CIPF. deborah.leahy@edwardjones.com

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