This week’s post comes to you courtesy of Christos, writer of Simply Finance. I’ve been a fan of his writing for many months now. He takes a complex subject and breaks it down into easily digestible stories backed up by sound data. Please enjoy this post and be sure to subscribe to Simply Finance.
Fitness and Finance have more similarities than most would think.
I met Daniel on Substack and as I was reading his content on Fitness it occurred to me how many parallels there are to the world of Finance.
We typically don’t realize the importance of Fitness and Finance in our lives until we get a little older. The neck and back pains start to kick in a lot more once you head into the mid 30’s.
Most also neglect both because they are afraid of making mistakes. For example, no one wants to lose money buying the wrong stock or look like a dweeb at the gym doing the exercises with poor form.
Not to mention there is this little thing called life. And between growing a career and taking care of a family, alongside the many distractions that come in between that, it’s natural to push investing (or fitness) to the back burner.
One thing is constant though, and that is as more time passes many find themselves facing financial uncertainty or wishing they had begun investing earlier, just as many find themselves disappointed with their physical health and wish they took better care of their bodies at an earlier age.
The first step is recognizing that it’s never too late to start investing, just like it’s never too late to start exercising and eating right.
Whether you’re just beginning or trying to get back on track, the key is to start as soon as you come to that realization. Don’t procrastinate it any longer.
The earlier you begin investing the greater the potential for growth, much like how the sooner you start a fitness routine the quicker you will get into shape and slow down the aging process.
Once you start investing regularly you might find yourself thinking, “I wish I had started this sooner.” The same goes for your fitness journey.
Once you see your portfolio and your muscles growing, or the dividends accumulating and your fat diminishing, your financial goals and your fitness goals start to become more important and attainable.
Procrastination in investing often leads to missed opportunities and higher risks, just as poor diet and exercise can lead to elevated risks of various health problems later in life. The earlier you prepare yourself the better off you will be.
If you don’t make time for investing now you might find yourself needing to make up for it later with higher contributions or riskier investment strategies to catch up. If you don’t make time for fitness now, some of the damage to your body might already be done or will simply take longer to return healthy from.
Taking control of your Finance and Fitness journey earlier will make it so you can enjoy the things you love later in life with less stress all around. After all, the goal is to enjoy the rewards of your hard work — not just in your retirement but throughout your life.
Take the time to start investing and exercising today and your future self will thank you for it.
I am not trying to push you into taking risks you aren’t comfortable with or to go hire some financial advisor or trainer who just wants to collect fees from you, I am trying to empower you to think about making better decisions today that will breed dividends in the future.
I work with a lot of traders and investors and the one common theme amongst them is they all wish they started learning about Finance at an earlier age.
It takes some time to learn the ropes.
Just like in fitness, investing requires discipline, patience, and planning. You don’t need to have a financial expert by your side to begin building your investment portfolio, but it wouldn’t hurt to get some ideas from someone that is a bit further along in their journey than you are.
The key is to develop a solid strategy, understand your goals, and stay committed to your plan. Whether you choose to invest on your own or find some mentors to help, what matters most is taking that first step and consistently working towards your financial objectives.
Let’s Say You Are Just Starting Out
If you’re young and without major financial obligations or dependents you have a unique opportunity to start investing now. I got “lucky” that I found a passion for Finance so early in my life.
As a 22 year old fresh out of college I had all the free time and flexibility in the world. Typically, the older you get the less free time and the more responsibilities you have. The good news is you probably have more money too, so there are pros and cons and I don’t want the older folks to feel like they have missed out!
More on them in a bit, but all the thoughts throughout this post can apply to every person at any age.
For now let’s focus on the younger folks, and if that’s you I want you to understand that you might not ever have more free time or flexibility in your life than you do right now. So it's wise to take advantage of it by doing something more than swiping right on dating apps during the week and looking forward to drinking on the weekends.
Drinking on the weekends doesn’t help your Finance goals or Fitness goals in any way, and dating apps suck.
Investing doesn’t have to start with some complex portfolio. The Dow Jones is the oldest Market Index we have. Take a look at this 100 year stock chart of it below.
It’s basically up and to the right the whole time.
There are some sharp corrections in there too, but most of them occurred before the 1980’s when the stock market and the US economy was much different than it is today.
In any event, market corrections shouldn’t scare you. They should excite you! They should excite you because it’s an opportunity to buy more on a discount of this asset that will go up and to the right until the end of time.
It can really be as simple as buying and holding an index product. That is the first step that everyone should not be scared of and start doing in small clumps often.
There are plenty of online brokerage platforms with user-friendly interfaces for beginners. I’m a little too sophisticated for Robinhood, but they have a great beginner friendly brokerage platform that makes sense for anyone who might be overwhelmed and doesn’t know how to get started.
As you get more experience and feel more comfortable it’s natural to have multiple brokerage accounts. I have a TastyTrade account and a Schwab account for example. You’ll build personal preferences with time. For example, I like charting on ThinkOrSwim’s trading platform by Schwab but I like executing trades on TastyTrade because it’s an easier user interface.
Don’t worry about those preferences now. They don’t matter right now and don’t let them intimidate you. Just open up a brokerage account and stop overthinking it.
There are also plenty of financial blogs and podcasts or YouTube channels that can provide valuable insights and strategies to spark some ideas and cultivate some passion to get you started.
You might also consider exploring online Finance communities that offer a structured way to learn about investing and/or trading.
Some people take the financial advisor route, and it’s not a bad idea, but my goal is more to empower the Do It Yourself Investor & Trader.
Once you realize that most financial advisors are simply putting you in products that track the S&P 500 you start to realize you can do it yourself, and paying them a fee to do it doesn’t make any sense.
Buying SPY or VOO for example is accomplishing the same thing as the products that most financial advisors are pushing, especially over longer periods of time.
Whatever route you choose, do your research beforehand.
Just because an investment guru with a polished online presence gives you a hot stock tip doesn’t mean it’s the right choice for you. If that guru is also flashing Caribbean vacations, expensive cars, and swimsuit models to grab your attention you might want to get a second opinion.
And third or fourth.
Look for reviews and verify credentials before making any decisions. Find ways to communicate with the team and/or the members of any online Finance community you are considering.
If you're considering a financial advisor, seek out feedback from current clients and inquire about trial consultations before committing to a long-term contract.
Ask questions about how these strategies differ from simply buying the S&P 500 or the Nasdaq.
Whatever decision you think you’ll eventually take doesn’t matter exactly, the key is to start that process right now. Take some time to educate yourself now, and choose an approach that fits your needs and preferences over time.
Don’t be afraid to change approaches with new information and experience.
Dollar cost averaging into an index product on your own while you educate yourself in hopes to become a more sophisticated investor and trader is a great idea.
Remember that the earlier you begin investing, the more time your money has to grow and work for you.
Let’s Say You Aren’t Exactly Young But You Aren’t Exactly Old Either
Maybe you are juggling a demanding career that you’ve worked hard to grow, a wife, a few kids, and all the random responsibilities that come with all of those beautiful parts of life that used to just be drinking on the weekends and swiping right.
Starting to invest now might seem daunting, but you can use those beautiful parts of life to fuel your motivation a bit.
You’re investing to help all of those beautiful parts of life in the long run. It’s time to put the bottle down now and delete those dating apps.
The financial stability and growth you gain from investing can provide you with more security for your family’s future and help you achieve long-term goals.
The blueprint here is really not much different from the 22 year old though. Start now with something simple, and take some time to educate yourself along the way to become more sophisticated.
To relate it back to fitness, maybe you start by doing some push-ups in your home every day and going for walks around your neighborhood. This is an easy first step that you can do while you take the time to educate yourself further and scan your options, just like dollar cost averaging into an index fund while you educate yourself further is another great first step in the world of Finance.
In this stage of life you might also have a bit more money that you have worked hard to save. Be extra careful with it.
Spend even more time educating yourself while you passively buy the index and learn the pros and cons between different investment strategies.
Several brokerages offer a way to papertrade strategies. Papertrading means trading in a simulated trading account with fake money. It’s a great way to test out ideas and learn the user interface of a trading platform without real money on the line.
If you're new to investing or haven't managed your finances actively before it’s natural to want some help.
Again, you can go the financial advisor route but that’s never been my favorite personally. To me, that’s a trillion dollar fee collection industry that is pushing products that mirror index returns.
We can do that by ourselves, and I think we can even do better. Not to mention the plethora of information for free on YouTube and Substack.
That being said, I am biased. I work for an online Finance community and I write on Substack. So I guess take my opinions with a grain of salt, but do understand there is nothing I am more passionate about than Finance and empowering the Do It Yourself Investor & Trader.
No matter which route you go it is going to cost you some money.
As the old saying goes, it takes money to make money. Hopefully the money you are spending is going to more than just some product that is tracking a market index that you could buy yourself in a Robinhood account — that’s all I ask you to be aware of.
In any event, here are a few tips to maximize the value of working with a financial advisor or online Finance community.
1. Share the Costs: Consider teaming up with a spouse, family member, or a friend to share the costs of financial planning. This can make the service more affordable and also create a support system as you work towards your financial goals together.
2. Interview/Talk With Potential Advisors/Mentors: Before committing to paying for help make sure to chat with them to discuss your goals and see if their approach aligns with your needs. Make sure to have realistic expectations and some alternatives that you can discuss the differences between.
3. Seek References and Reviews: Look for feedback from other clients or check online reviews to gauge their reputation. Trust Pilot is a good website for checking reviews shared on different companies.
4. Create a Plan: Work with your help to establish a comprehensive investment strategy that includes regular check-ins. Ideally, you should meet with them periodically and follow a plan that includes additional investments or adjustments that you can manage on your own. If this person or community is unwilling to collaborate on a plan that includes both their guidance and your active involvement, it might be worth seeking some different guidance. They should be easy to get a hold of at any time during the trading week.
5. Treat Your Investment Plan as a Priority: This is something you work on almost every day if not every day, just as you would treat a diet and exercise routine as a crucial part of your daily health regimen. Diets only get 1 cheat day per week, the same goes for your financial goals.
Starting to invest while you run a busy schedule can be challenging but also highly rewarding. You have matured enough now to make better decisions. That doesn’t mean you wont make some mistakes, but the goal is to make less of them while you have more money working for you as you gain your experiences and become a more sophisticated market participant.
These steps will allow you to build a strong financial framework that supports both your current needs and future aspirations.
How About The Folks In Or Around Retirement Age?
If you're nearing retirement and thinking it might be too late to start investing, you’re wrong!
Yes you have less time on your hands, but 5-10 years is a lot of time in financial markets. As the world becomes more digital it also shortens the time length between major shifts that occur in the economy and financial markets.
The financial and physical challenges that come with aging won’t resolve themselves, but telling yourself, “I’m too close to retirement to start investing,” doesn’t help you in any way. Telling yourself, “I’m too old to start any diet or exercise now” is just an excuse. It’s not true. It’s never too late, and starting now can only benefit the rest of your life.
While investing won’t erase past financial mistakes or all those cigarettes you smoked in your teens, and it won’t guarantee an immediate solution to all your retirement worries, but it can only strengthen your financial framework and give you a chance at reaching goals you never imagined.
There are plenty of options for those looking to better their financial health as they approach retirement:
1. Explore Retirement Accounts: Even if you're nearing retirement, contributing to tax-advantaged accounts like IRAs or 401K's can still be beneficial. Catch-up contributions are available for those 50 and over, and if you own a business of any sorts which is as easy as registering for a EIN number these days, there are some “back door 401K” options you can explore that allow you to contribute much more money annually than an individual could in a retirement account.
2. Don’t Forget The Basics: Dollar cost averaging into an index over time is as basic as finding 30 minutes a day to stay active and cutting out the junk food.
Basic works. Basic makes progress. Basic is where you start.
Dollar cost average more aggressively as you get market corrections, and increase your workouts as you feel them getting easier.
3. Seek Help: You need help. There’s a lot of great free help around the internet but a lot of crap too. You need to acquire the skills of learning where to look, and also don’t neglect investing in your education a bit. There’s nothing wrong with paying a reputable source to learn from, especially if you're unsure how to navigate the complexities of retirement planning.
As much as I don’t love financial advisors they might have some annuity product that interest you. It will be an extremely low return, call it 5% a year, but 5% a year guaranteed on 1 or 3 million dollars that you might have might be all you are looking for.
Others will need larger returns, and that will require taking a bit more risk. Be sure to understand your goals and be realistic about the potential risk and rewards that come with your strategy.
4. Utilize Financial Planning Tools: Many online platforms offer retirement planning tools and calculators to help you estimate your future needs and create a plan. Many of these tools are free or low-cost and can help you think your plan out.
Or, talk it out with Chat GPT, it’s free and it’s really intelligent. Also google a “compound interest calculator” and fool around with it.
I Know It’s Not Easy, But It’s Also Not As Hard As You Make It Out To Be.
It all gets easier with time.
The unfortunate reality is that many people approaching retirement feel overwhelmed and unsure about starting new financial strategies. However, it's important to remember that age should not be a barrier to financial planning.
Chronic financial issues or market fluctuations may impact your strategy, but they shouldn't deter you from taking action.
Remember that it’s never too late to start creating stronger Finance and Fitness goals. You’ll be surprised at how much stronger you are in 5-10 years if you just start today.
We all have that time.
Just as with fitness, the key to successful investing is to start with what you can manage, seek out resources that suit your needs, and stay committed to your plan almost every single day. Make it a priority, and understand that every step you take now can make a significant difference in your health and wealth later on down the line.
One Final Piece of Advice:
You can start your investing habit TODAY RIGHT NOW regardless of your age or income. Set aside 30 minutes right now to review your finances, research investment options, or plan your monthly budget.
Whether you’re exploring stock market fundamentals, reading up on mutual funds, or using a retirement calculator, it doesn’t matter. Just take those 30 minutes to engage with your financial future.
Do this consistently for a week and begin to build your investment habit.
It’s not about how much you invest or how sophisticated your strategy is at the beginning — what matters is taking that first step and making it a regular part of your routine.
Just as with exercise, the key to building an investment habit is consistency. Start small, stay committed, and gradually increase your knowledge and investments as you become more comfortable.
By dedicating time each day to focus on your finances, you'll lay the foundation for a strong investment habit that can grow over time.
Fitness is exactly the same.
I hope you enjoyed reading Simply Finance. Please share this edition of My Stories with anyone that you think would benefit.
And don’t forget to subscribe so you don’t miss the next one!
Disclaimer: These are not recommendations and I am not a financial advisor. These are just my two cents, or two satoshis as the kids say. Remember to do your own homework before making any financial decisions. Also, keep in mind I usually have some investments in the things I discuss.
Thanks for the collab post Daniel! Got one from you coming on my page soon!