Investing is a lot like training for a running race. Both require planning, consistency and a long-term goal. If you’re a runner looking to get into investing, here’s a guide to getting your finances fit for investing.
1. Set your goals
Just like you wouldn’t start training without a goal race in mind, you shouldn’t start investing without clear objectives. First, you need to think about what you’re investing for: retirement, buying a home, your children, a future mega holiday or something else. The next step is to think about your time horizon. Is your investing goal fairly short term, in the next five to 10 years, or much further out? This will help you to work out how and where to invest.
2. Create a plan
A well-structured training plan is crucial for running success, and the same applies to investing. First up, you need to have the right foundations in place. So before investing, build an emergency fund covering three to six months of expenses that you keep in cash. This is your injury prevention strategy, ensuring you’re protected against unexpected setbacks. Next up you need to think about your budget and how much you can afford to invest each month.
3. Educate yourself
Knowledge is power, whether it’s about running techniques or investment strategies. You certainly don’t need to know everything before you start investing, but it’s a good idea to learn the basics. Understanding fundamental investment terms will make you more confident when you start investing. Regularly reading financial news, books and blogs will help to build your knowledge.
4. Start small and build gradually
When starting a new training program, you don’t jump into high mileage right away. The same goes for investing: begin with what you know. You could start with simple investments, such as trackers, which track a stock market index and can provide broad market exposure. You should also think about regular investing, as it benefits from something called pound-cost averaging. This is where you invest a fixed amount regularly, regardless of market conditions. This approach, like consistent weekly mileage, helps build discipline and reduces the impact of market highs and lows.
5. Diversify your portfolio
Just as varied workouts enhance your running performance, diversification strengthens your investment portfolio. To diversify your investments you’ll want to avoid putting all your money into one stock, sector or even country. Instead you should aim to invest in a mix of asset classes and industries, which can help to reduce the risk in your portfolio. An easy way to do this is to invest in a multi-asset fund, that achieves this spread for you – to save you shopping around for lots of different investments.
6. Monitor progress and adjust
Runners track their progress and tweak their training plans as needed. Investors should do the same with their portfolios. Make sure you review your investments periodically to ensure they’re still aligned with your goals and to see if you need to make changes. But don’t become obsessed with checking your account, as you should be making changes too often.
7. Stay the course
Long-term success in both running and investing requires persistence and resilience. You need to try to avoid emotional decisions. In the same way that you shouldn’t be too upset by one bad run, market fluctuations can tempt you to make impulsive decisions. If the market drops, try not to react emotionally, instead stay focused on your long-term goals and stick to the plan.
8. Seek professional advice
Every runner has had to get the professionals in at some point, and investing is no different. Financial advisers can be a good option if you want to outsource your investments to a professional. It will cost you money but you might decide that’s worth it for the expertise.
By approaching investing with the same dedication and strategic planning that you apply to running, you can build a robust financial future while enjoying the journey.
To find out more, download the AJ Bell free-to-access guide here.
This article is for information purposes only and is not a personal recommendation or advice. The value of your investments can go down as well as up and you may get back less than you originally invested.
