Learning from our Olympians

The importance of a coach Even the best athletes need a coach. While it is unlikely that Cameron van der Burgh’s coach could swim the 100m breaststroke in 58.4 seconds, he certainly helped Cameron in not only winning gold but breaking the world record. H

Even the most sophisticated investor needs an adviser, someone to highlight your blind spots especially at times when emotion skews your perception of reality. An adviser is there not only to give advice and share their knowledge, but also to give perspective, help you to set your goals and ensure you reach them.

Selective information

All athletes avoid listening to the millions of couch coaches out there who believe they have the answer. Not only would all the conflicting advice be confusing, but few side-line coaches have the real expertise to help improve the performance of the athlete.

You need to take the same approach with your investments. While it may be interesting to listen to the views around a braai, you need to decide whose advice you are going to listen to, how it fits into your personal financial goal and to filter out the noise.

Success takes time

An athlete will never achieve success if they leave their training to the week before an event. It takes years and years of training and discipline to win a gold medal. An athlete who has left their training too late may be tempted to over train the week before the event and end up with an injury rather than a medal.

In the same way many people leave retirement planning too late and are then forced to make aggressive investment decisions to try and catch up the years of returns they have missed. This is a dangerous strategy and you are more likely to lose money than reach your goal.

Know when to rest

An athlete who has trained hard in preparation for a big event will cut back their exercise regime several days before the big race. Usain Bolt, the fastest man in the world, arrived on a golf cart to run his record breaking 100m sprint. He was keeping all his energy for those precious 9.63 seconds when he would give it his all.

As an athlete knows when to cut back on training, an investor needs to lower the risk profile of their investment as they approach their goal. For example during a sustained market bull-run it may be tempting to keep your retirement portfolio fully invested in equities in the hope of increasing your returns even further. But this hindsight bias assumes that last year’s returns will continue into next year, yet past performance is no guarantee of future returns. Make your investment decisions based on your goals, not the market returns.

It’s not necessarily over if you did not win gold

Both Caster Semenya and Chad le Clos will be back at the next Olympics with the hope of swapping their silver medals for gold. While they did not achieve all their goals this year, they have four more years to prepare.

Many investors may find that they have not achieved their goal of a comfortable retirement by the time they reach the traditional retirement age of 60. However, 60 is still a relatively young age today and there are still options available - such as continuing to work a few more years or taking partial retirement so that you are able to leave your funds to grow. The longer you defer retirement the more likely you are to reach gold.

It takes perseverance

In order to be a top athlete you have to keep doing the same thing over and over again for long periods of time. Most Olympians began their training while still at school, and in many cases even primary school where they had to wake up at the break of dawn every morning to get their training in. It takes hard work and sacrifice to be a gold medallist.

The same discipline comes with investing. It may not be easy to put that extra R1000 away each month, but unless you do you will not reap the rewards. It is usually during tough economic times that people stop saving. Yet, the best buying opportunities often present themselves in periods when share prices are falling. Your sacrifice during the tough times will ensure you reach your goal.

When to have more than one coach

South African triathlete Richard Murray needs a different coach for each of his disciplines in the pool, on the track and on his bike. However his coaches also need to be in communication with each other and working to the same goal – to win a triathlon. The aim is not to be the best swimmer, runner or cyclist – but to be able to put all those elements together to be the best triathlete.

When it comes to your financial plan you may need expertise in different areas such as estate planning and risk cover, or you may have a stock broker if you have your own share portfolio. Some advisers are able to offer all of these areas of expertise within one practice while others may focus only on one area of specialisation. What is important is that the input all forms part of one holistic plan to reach your financial goals.