Vail Daily column: Investors can learn from swimmers’ diets
Summer isn’t here yet, but it’s getting close. And for many people, the arrival of summer means it’s time for swimming at the local pool or lake. If you’re just a casual swimmer, you probably don’t have to adjust your diet before jumping in, but that’s not the case with competitive swimmers, who must constantly watch what they eat and drink, particularly in the days and hours preceding races. While you may not ever have to concern yourself with your 400-meter individual medley “splits,” you can learn a lot from swimmers’ consumption patterns — particularly if you’re an investor.
For starters, to sustain energy and stamina for a relatively long period of time, competitive swimmers need to eat easy-to-digest carbohydrates such as whole wheat, whole grains, apples and bananas. When you invest, you want to build a portfolio that is capable of “going the distance.” Consequently, you need investments that provide carbohydrate-type benefits — in other words, investments with the potential to fuel a long-term investment strategy. Such a strategy usually involves owning a mix of high-quality stocks, bonds, government securities and certificates of deposit. By owning these vehicles, in proportions appropriate for your risk tolerance and time horizon, you can help yourself make progress toward your financial goals and lessen the risk of running out of energy.
Of course, competitive swimmers have to be diligent not just in what they eat, but also in what they don’t. That’s why they avoid sweets, such as sodas and desserts, when it’s close to race time. These items don’t provide lasting energy — in fact, they actually sap energy once the sugar wears off. As an investor, you too need to avoid the temptation of “sweets” in the form of high-yield or “hot” investment vehicles. You may find some of these investments to be alluring, but you need to carefully weigh the extra risks involved. For many people, these types of investments may not provide the long-term stability needed to help maintain a healthy, productive investment portfolio.
While what swimmers eat or don’t eat, is important, their drinking habits are also crucial. The competitive environment can quickly lead to dehydration, so swimmers need to drink sizable amounts of water and sports drinks before and during practice. And you as an investor need your own type of liquidity for at least two reasons. First, you need enough cash or cash equivalents to take advantage of new investment opportunities as they arise; without the ability to add new investments, your portfolio could “dehydrate.” Second, you need enough liquid investments — specifically, low-risk vehicles that offer preservation of principal — to create an emergency fund, ideally containing six to 12 months of living expenses. Without this, you may be forced to dip into long-term investments to pay for unexpected costs, such as a major car repair or a large dentist bill.
So next time you see competitive swimmers churning through their lanes, give a thought to the type of diet that is helping propel them along — and think of the similarities in what is “fueling” your investment strategy.
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Tina DeWitt, Charlie Wick and Kevin Brubeck are financial advisers with Edward Jones Investments. They can be reached in Edwards at 970-926-1728 or in Eagle at 970-328-4959 or 970-328-0361.