Investing Like A Fitness Workout

I have problems keeping fit. I admit that I spend most of my time building organisation and grooming skills, and because of that, I lack in exercise. One day, I told my friend—who has a six-pack, by the way, and is always looking fresh— that I wanted to commit to a gym routine.

“Can you coach me for a few weeks?” I asked.

He said, “Follow me to my kitchen, and I will teach you what is important for your routine.” He mentioned that “Your routine starts in the kitchen, not at the machines.”

He told me to start with what I want to achieve by the end of the day. He then shared with me a few recipes of blending super fruit juice for daily consumption. Good nutrition is fundamental for all training. He told me that I need to understand protein, vitamin, mineral, and carbohydrate intake.

Starting from the morning, we can prepare a healthy breakfast, delicious fresh salads, protein-based meals, and even guilt-free desserts.

Most of us are not aware of what we are eating daily. If we do not control our eating habits, we cannot control our bodies. If we cannot control our bodies, they will one day control how we live our lives.

Super fruits: Raspberries, Blueberries, Strawberries, and Blackberries

I found that there are many similarities between both personal fitness and personal finance.

There are seven common investment myths:

No 1.: Begin without an End in Mind

The reason we go to a gym is that we want to stay fit, reduce down to a certain weight, reduce BMI to a certain amount, and so on.

It is the same with investment. We set a goal to achieve a certain investment return. For example, we would be satisfied with an investment that provides us with an average return of 10% annually for 15 years.

It is always easier to believe in something that is too good to be true. I encounter lots of investors who tell me how a particular lucrative online investment offers 2% per month. The capital investment will appreciate once the company goes to IPO. When there is doubt in an investment scheme, please call BNM TELELINK (Customer Service Call Centre) at 1-300-88-5465.

No 2.: The Insider News

We have many so-called fitness gurus out there sharing their successful training plan, which may include ingesting some health food, drinks, or supplements. Investment gurus do the same thing. One seasoned investor has reaped a great return on a stock investment from a tip given by an experienced stock columnist. For the second time, he invested 80% of his wealth into another hot tip. However, market correction occurred during the second investment, and the investor lost nearly half of the asset value. Even a seasoned investor can also get caught by “hot tips”!

The so-called insider news claim turned out to be a syndicate that provided valid news at first to lure big investors for a second investment. Avoid taking third-party “hot tips” and do enough homework before investing. 

No 3.: Right Time for Dollar Cost

While doing a workout, it is important to observe a correct diet so that your effort does not go to waste through replenishing calories.

Similarly, while there may be profits in some investments, there may be a loss in others. The wrong method of investment is to put in an investment only once and wait for a while, hoping to see the return. Unknowingly, there may be a huge correction coming.

A huge correction means lots of value buying in the market. That is the right time to buy in. It is always easier to say than do. We always have the fear factor within us, afraid that the market will collapse and cause further correction.

We have specially designed a systematic way to avoid bad timing in the market and automated our investment portfolio without much emotion. For this strategy, stay tuned for my next couple of series. 

No 4.: Lost Connection with GPS

Sometimes, when we are working out, we lose track of the time. We use GPS to lead us to unfamiliar places, and we turn off the GPS because we have committed common locations to memory.

Many investors know exactly when their fixed deposits are maturing but have no idea when that happens when it comes to their more volatile and growth-oriented investments. Investments must be tracked more regularly, and you must understand your net worth status. Knowing this information will help for long-term wealth accumulation to meet your financial goal.

 

Continuous workout training will eventually show its results.
So will your compounding return

No 5.: Lack of Discipline for Consistent Compounding

The discipline in sticking to a scheduled fitness program will most likely guarantee a fit body. It is when we start to lose faith, slack off, and give up that we will be back to square one.

Build a consistent portfolio that will provide you with a reasonable rate of return that can easily combat the inflation rate or the risk-free rate. Many investors seek the highest return in the shortest time frame. However, they often miss out; that higher return always comes with higher risk, and the time factor can help to snowball your investment value overtime. Investors frequently switch their target as greed sets in. Stick to your plan and assess your investment plan constantly. 

No 6.: Constant Dripping Wears a Stone

There is a Chinese saying: “Constant dripping wears a hole in the stone”. You do not get fit by just doing a long and strenuous gym workout for just one day. It requires you continuing for a few weeks or even months to see the results.

Set aside the cost of a daily cup of coffee, and it will be able to compound for your retirement plan. For example, investing RM10 a day for next 30 years with a compounding rate of 10%, you will achieve RM447,107 by the end of the 30th year. A small habit will build a great fortune in the future. 

No 7.: No Investment Philosophy

When working out, you have a fitness program that acts as a guideline for you to achieve your perfect body. You do not just simply workout your abs but decide to ignore your arms and legs.

Similarly, in investment, we have strategies or philosophies that we will need to adhere to. It is just a simple statement of your preference and taste. How much allocation are you willing to set aside, which type of risk you can take in, and what time-frame have you set to seek returns for your investment portfolio. Having an investment philosophy will prevent you from being overly greedy or overly fearful. Hence, we have established a simple strategy for investors as a guideline, which we will cover in the next article.

  

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About the Author

Andy Yap is the CEO of Great Vision Capital Growth. He has been in the financial services industry for the past 14 years. He currently leads the investment arm of the company.Andy has vast experience in the financial planning industry.  He is also a public speaker for financial and business seminars both locally and abroad. He believes that hand-holding clients through tough economic cycles is the key to building long-lasting trust.