100 Miles to a Better Retirement
"100 miles is not far."
With all due respect to ultrarunning great Karl Meltzer, the idea of running 100 miles not only seems far to most people; it seems downright impossible. After this past weekend, however, I can say from firsthand experience that running 100 miles is, in fact, quite possible. No, I didn't run a 100-mile race (yet!), but I did have the opportunity to pace a friend through 22 miles of the brutally tough Wasatch Front 100 race in the mountains of Utah.
As we Fools look ahead to Worldwide Invest Better Day on Sept. 25, I couldn't help but notice how successfully finishing a 100-mile race holds some valuable retirement-investing lessons. Sure, most people have no interest in running a 100-mile race, but nearly all of us have our eye on retirement someday, and getting there requires some of the same planning, persistence, and mental toughness.
Lesson 1: Focus on what's in front of you
In a 100-mile race, thinking about mile 100 when you're just starting mile one can be seriously discouraging. Not only is it likely to psych you out, but can lead you to ignore the things you need to be doing in the moment, e.g., staying hydrated, eating, and putting one foot in front of the other.
Saving for a retirement that could be decades in the future and requires millions of dollars can be an overwhelming endeavor. While it's important to have the big picture in mind and know how much you'd like to have saved when it comes time to retire, it's at least as important to focus on what you need to be doing today. That means attending to thinks like:
- Making sure you're saving enough.
- Watching fees on mutual funds and keeping trading costs under control.
- Setting aside enough time for research if you plan to invest in individual stocks.
- Knowing your risk tolerance and ensuring your portfolio reflects that.
Lesson 2: No Hail Marys
Completing a 100-mile course is not an exercise in wild optimism and making extreme, lung-busting efforts that you can't sustain. In fact, that's a great way to burn yourself out and end up a pile of broken-down muscles that needs to be scraped off the trail. Steady efforts are where it's at for the majority of ultradistance runners.
Likewise, investing is not Vegas. If you're saving for retirement, there's no excuse for finding a high-risk stock, treating your nest egg like a roulette bet, and putting it all on red. While those kinds of bets do occasionally pay off, the potential for a major hit to your portfolio could cripple your retirement hopes. Accepting that saving for retirement takes a long-term effort allows you to focus on investments that may not be flashy but will more reliably help you fulfill your retirement plans.
Lesson 3: Less whining, more addressing the problem
At the Wasatch Front 100, the winner finished in 19 hours and 33 minutes. That's the better part of a full day, and a lot can happen in that amount of time. Among seasoned ultrarunners, the question is when, not if, a problem -- stomach issues, blisters, a twisted ankle, etc. -- will crop up during the race. Overcoming that problem and finishing the race means quickly finding a solution to those problems, rather than complaining about them.
We're all going to make our share of mistakes while investing. There will also be times when we do things right, or when something unexpected happens that affects our investment thesis -- like the BP (NYS: BP) oil spill that tarnished the brand and led to billions in costs, or the retirement of Apple's (NAS: AAPL) Steve Jobs, which removed a true visionary from the top of the company. At other times, the entire market just craters -- as we saw when the Dow Jones Industrial Average (INDEX: ^DJI) plunged 47% between the beginning of 2007 and the crash's nadir in March of 2009.
Whether the stumble was your own fault or not, dwelling on the lost wealth in your portfolio won't help you get back on track. When trouble strikes:
- Get yourself in a sober mindset. In times of crisis, investors all too often panic and do exactly the wrong thing, like getting out of stocks completely in March of 2009.
- Step back and assess the situation.
- Make any changes -- increase your savings rate, tweak your asset allocation, etc. -- that are necessary.
Lesson 4: Don't be afraid to ask for help
One thing that's obvious about a 100-mile race is that few, if any, runners do it on their own. Many runners at Wasatch had pacers that kept them company and watched over them for 50 miles of the race. Some runners had crew teams that met them at various checkpoints to provide gear, food, and encouragement. Every runner benefited from the awesome volunteers that manned aid stations every five to 10 miles along the course.
Online articles like this one may not have all the answers or be able to give you the specific formula for your retirement portfolio, but learning as much as possible from as many sources as possible can help make you a better and more knowledgeable investor. Investors looking for more specific stock-oriented advice can turn to newsletters and other stock-picking services. Finally, investors with more investable assets, complex financial situations, or a desire for more guidance can get that from a carefully chosen investment advisor investment advisor.
Of course, if you're dedicated to learning more about becoming a better investor, you're absolutely in the right place: The Motley Fool is delivering gobs of great content as we prepare for Invest Better Day later this month. To learn more, just click the bar below.
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