Business

Pace yourself: Why investing is like running a marathon

Running a marathon is an experience which may feel similar to those holdings investments over the past six months
Running a marathon is an experience which may feel similar to those holdings investments over the past six months Running a marathon is an experience which may feel similar to those holdings investments over the past six months

MANY people will have been pounding the pavements and parks recently in preparation for Sunday's Belfast Marathon. And it's an experience which may feel similar to those holdings investments over the past six months.

Training through the winter months can be painful but then as the New Year begins and marathon day approaches, fitness and the weather improve. Despite this, staying disciplined and focused on this goal can still be really tough.

Achieving any goal tends to follow this pattern, so here we look at the challenges facing both those training for a marathon and those looking to achieve their long-term investment goals.

Similar to trying to be a marathon runner, being a successful investor is difficult, sometimes really difficult. It is both intellectually and emotionally challenging. It also cannot simply be solved once and moved on from; it requires you to be very focused about what you want to achieve and not succumb to the many distractions along the way.

The urge to skip training sessions, miss saving for the month or make snap investment decisions that give you short-term comfort at the expense of the long term will need to be curbed. It requires constant patience, discipline and vigilance. Every single day.

A big long-term goal is unachievable on its own. That’s not to say you shouldn’t be ambitious and dream big, however, without a plan detailing the smaller, manageable, intermediate actions towards your goal you may struggle to stay on track.

Like starting with short runs and building up the distance in a disciplined manner, saving £10 a day seems a lot more manageable than saving £3.5k in an annual lump sum. Creating good habits is key for both activities. A written plan and schedule shared with friends and family can help to create the commitment required to actually stick to the schedule, for both running and investing.

An injury for a runner can bring the same emotional distress as volatile markets do for investors. You may question what you are doing, whether you can stick to the plan and even be tempted to give-up, cash-out. Life is full of potholes that can threaten even the best plans, however few are actually as big or threatening as we think they are in the moment.

If you are more likely to suffer anxiety with the markets’ fluctuations, and there will be many, then make sure you put them into the context of your long-term goals. You may well have plenty of time to recoup any losses experienced. You need to be resilient in order to be successful.

Improving marathon fitness requires rest and recovery. In the same vein it’s important at times to step back from your investment portfolio and let it rest.

Yes, investors should review their portfolio periodically to ensure that it is still suitable, but beware of over-monitoring. Technology now puts the power to review portfolios into our palm 24 hours a day.

It is easy to get into a habit of checking your investments on a daily (or even hourly) basis, and will likely lead to a desire to make more decisions than necessary, especially during falling markets. This bias for action can lead us to sell at the bottom and reduce our risk before we can benefit from any potential rebound in the markets.

The path to good marathon performance, like investing success, is not flashy and glamorous. It requires a consistent and calculated plod. It doesn’t provide the hit of adrenaline or have the same kudos as the 100m sprint or the get-rich-quick investments; in fact it is undoubtedly boring. Some of the world’s best investors have acknowledged this.

George Soros, an investor and hedge fund manager said: "If investing is entertaining, if you're having fun, you're probably not making any money. Good investing is boring."

:: Claire McCombe is a private banker at Barclays Wealth & Investments NI