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What Neeraj Chopra’s Olympic gold run can teach us about a winning investment strategy

Sport and investing have a lot in common - grasp opportunities, avoid mistakes and defend your gains. Yet, winning all starts with a plan.

August 26, 2021 / 10:12 AM IST
Neeraj Chopra.

Neeraj Chopra.

The Olympics provides a fun lens to look at the commonality between sports and investing. Many athletes, like our own Indian contingent that did us proud with a total tally of seven medals, followed a carefully crafted plan to the starting block. This plan is often four years in the making, guided by a coach who makes little adjustments depending on injuries and the competitive landscape. You’ll be hard-pressed to find any athlete on the podium that just wings it.

This is very similar to successful investors, who have a plan, often have a coach (via a financial adviser) and make adjustments depending on the investment environment around them.

If you need to look for inspiration, look no further than Eliud Kipchoge, the marathon world record holder. He has been very honest about the challenges getting to the starting line in Tokyo, but has stuck to his foundations of excellence: “I still continue with my training, I have the same coach, same management, same thinking and that's why I am here again.”

There is something beautiful in that framework. It is simple and it works. It starts with a goal. It has a plan to attain that goal. It has support mechanisms. And it enforces discipline to stick to the plan.

This has important lessons for investors too. The real secret to a great investor is to know the framework of their success—especially the people around them and the process they follow (which happens to be two key pillars we use to assess fund managers). This is far more telling than just admiring performance.

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Naturally, everyone’s financial goals are slightly different, but let’s connect Kipchoge’s plan to that of a couple wanting to retire early:

Continue the training

You need clarity of your goals to create a great plan, but you also need to follow that plan once it is decided. This is the unglamorous part of wealth accumulation.

For example, an ambitious retirement goal might require you to salary sacrifice into your pension, but also top up your outside investment vehicles while paying down debts. Far less exciting than talking about crypto millionaires at a barbeque, but it works.

Also read: What the recent Olympics can teach us about managing money matters

Same coach and management

External influences like a job loss or a market downturn might be speedbumps, requiring slight amendments to the plan. Having an experienced team to support you is a great asset.

Same thinking

Investing, like sport, is all too often mental. It is remaining disciplined even when you aren’t seeing short-term results. It is being humble when things are going well. Behaviour matters. We spend a lot of time internally checking our own behaviour, making sure our eye is on the prize (empowering investor success).

Take the case of Neeraj Chopra. From an overweight 12-year-old boy from Haryana, Chopra became only the second Indian to win an individual Gold medal at the Olympic Games.

Like an Olympic gold medalist, it’s entirely possible to win your race to your financial goals, even if you lose on occasion on the way there. Or said another way, you don’t need to break the world record on every run. If you can commit to the plan, minimise your errors and avoid large setbacks, you are likely to make incremental gains and rocket up your own leaderboard.

This holds mathematically too, as bigger falls (or injuries) require increasingly bigger recoveries: a 10 percent fall requires a 11.1 percent rise to get back to even, a 20 percent fall requires a 25 percent rise, a 50 percent fall requires a 100 percent rise, and so on. Setbacks are a part of investing and sport, but they shouldn’t stop you from participating.

The central point here—which holds in investing and sport—is to craft a plan that seeks marginal gains rather than risky leaps, a concept popularised in cycling. This is done by making hundreds of small improvements along the way. For example, don’t try to suddenly save 50 percent of your wage tomorrow, save 5 percent and work upwards.

(Dan Kemp is Morningstar Investment Management’s Global Chief Investment Officer) 
Dan Kemp
first published: Aug 26, 2021 09:44 am

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