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Long-term perspective: Essential for athletics and investing

by on March 15, 2013

Good insight from Steve Holman of Vanguard that gives a view on maintaining a long-term perspective and the importance of delaying gratification.  He also reminds us that “doing the right thing means having clear goals, choosing the right balance… and investing for the long term.”

Long-term perspective: Essential for athletics and investing

If you’re looking for insight on investments and personal finance, you could do a lot worse than asking a long-distance runner.

Vanguard is a second career for me. After college, I had the great fortune to compete as a professional distance runner. Yes, there are such things as professional distance runners; however, our rewards tend to be more spiritual than financial. After participating in the Barcelona Olympics for the United States in 1992, and competing across the globe as a world-ranked miler for almost ten years, I “retired” at the age of 31.

Whether you’re 31 or 65, retirement isn’t an easy adjustment. Many of us experience a profound sense of nostalgia and melancholy for our former lives. We worry about what lies ahead. Like many retirees, it took me a while to figure out my next step. Ultimately, I decided to go to business school.

While I had been a Vanguard client for a number of years, making a career here was never a serious consideration until I spent time here as a summer intern while I was in grad school. As it turns out, many of the defining characteristics of my athletic career directly linked to Vanguard’s investing philosophy.

Long-term perspective: Distance runners know that success is never a product of a single run; it’s the cumulative effect of remaining committed, consistent, and focused over a long period of time. At times, it’s hard to remain diligent for a benefit that seems so far off in the future, but the rewards when you achieve these goals are immense. Investors, too, are often rewarded for remaining disciplined and maintaining a long-term perspective.

Delayed gratification: Getting up at 6 a.m. to jog isn’t “fun.” Pushing through the last few miles of a tough workout is rarely enjoyable. Runners know that you have to make choices and sacrifices in the short term if you hope to improve fitness over time. Putting money away in savings means you’re not consuming something cool now, and that can be tough. But a less expensive car now could mean a happier retirement later.

No quick fixes: I’m proud to say that I never used performance-enhancing drugs during my athletic career. I could have doped and run faster, maybe even got away with it, but it wasn’t the right thing to do. Instead, I got up every morning and put in the miles, year after year. It’s easy to be seduced by portfolio-enhancing alpha strategies and esoteric alternate investments. Occasionally these things work in the short run, but usually they don’t, and sometimes people go to jail. Doing the right thing means having clear goals, choosing the right balance of low-cost funds, and investing for the long term.

And as I learned long ago, hard work gets results—even when you can’t see the finish line.

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From → 2013

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