The all around athlete (The Financial Athlete #110)

A complete exercise regimen trains for good posture, flexibility, balance, strength and endurance. To cross-train is one solution improve upon these five facets of exercise. Those who are too pressed for time to cross train should practice yoga. Yoga addresses all the five facets. Swimming is another standout exercise as it increases flexibility, strength, and endurance.

Interestingly, the five facets of exercise apply to the greatest attributes of an all around Financial Athlete.

THE ALL AROUND FINANCIAL ATHLETE


1. CORRECT FINANCIAL POSTURE

Stand with a correct financial posture and you will not find yourself forced to sell valuable assets at fire sale prices. Always be prepared for the worst of times. Reserve cash and protect much of  it from inflation (TIPS, for example). The typical mistake of the positive thinking investor to prepare for the best possible scenario and dismiss the worst possible scenario.

A reserve of cash also leverages your negotiating power in illiquid markets. Bargains are commonplace when times are hard.

2. FINANCIAL FLEXIBILITY

It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.
– Charles Darwin

On one end of the spectum is the risk averse man who strives for perfection and fears failure. On the opposite end of the spectrum is the man who thrives on risk and heeds no lessons learned from mistakes. Both lack flexibility.

To be responsive to change, be mindful of trends on 3 levels: macroeconomic, fundamental, and micro (company for a stock and local area for real estate).

To paraphrase Charles Darwin’s quote above: It is not strongest of the investors that survives, nor the most intelligent, but the one most responsive to change.

For more on Financial Flexibility, review ‘Be like Water’.

3. FINANCIAL BALANCE

Build multiple streams of income by diversifying into different asset classes (commercial real estate, residential real estate, bonds, stocks, commodities, etc.)

In selecting stocks, balance qualitative and quantitative aspects of an investment. For more on this review On Balance.

4. FINANCIAL STRENGTH

True financial strength is not measured in piles of money. It is measured in financial freedom. An old widow with a paid off mortgage and monthly income exceeding expenses has more financial freedom than a tycoon constantly preoccupied (oppressed) with his portfolio.

For more on financial freedom review Pole vault your way to financial freedom.

5. FINANCIAL ENDURANCE

Allow compound annual growth rate to work in your favor. Ignore the fast track to riches. For more on financial endurance review A sport of endurance.


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