By Adam Werner, Wealth Manager Assistant
As many of you may know, I am a competitive drag racer at Maple Grove Raceway in Mohnton, PA. Our racing season typically goes from May to October, and now that another season has come and gone, it’s good to reflect on what went right and what can be adjusted for next year. Which got me thinking about some of the parallels between racing and financial planning and investing.
When I try to explain bracket racing to someone for the first time, I get a lot of puzzled looks and questions like: “so it’s not just who has the fastest car?!?” or “so you just drive fast in a straight line?”
And while those questions are not unreasonable, there is so much more at play. At a very high level, bracket racing is a form of drag racing that allows for a handicap start between predicted elapsed times of the two cars over a quarter-mile. This places an emphasis on the consistency of driver and the car rather than pure speed, which makes victory much less dependent on who spends the most money and more dependent on mechanical and driving skill.
This has many parallels to financial planning and investing:
- There is a massive amount of preparation and work put in well before race day
- Before making any changes to your financial plan or investment strategy, make sure you put in the work to research and explore your options
- Sometimes you just need to run your own race, not focus on the driver in the other lane. Come up with your game plan/strategy and then go out and execute. Tune out the noise and distractions.
- Develop your financial plan and invest with purpose. If you own a diversified portfolio, the headlines on TV probably aren’t a good benchmark to judge how you are doing.
- It’s not always full steam ahead. You can lose by going faster than you predicted, so the first one to the finish line doesn’t necessarily win. It’s about being on time.
- Don’t get ahead of yourself. Sometimes outside factors render your predictions inaccurate, time to make some adjustments to bring you back in line.
- What’s working, what’s not and what can be done to remove variables and improve consistency
- Take a step back to review your overall plan from time to time. It’s easy to get stuck in the details and lose sight of the bigger picture.
Like many things in life, racing and financial planning are complex tasks. Developing a game plan is a good idea, but what pushes that from good to great is execution. A great idea is really just a good idea that is well executed.