by Kenny Brown, Heritage Trust
Recently I joined a boot camp. I have friends and neighbors who rave about them, and I thought if it’s working for them then it should work for me, right? After my first class, I thought I was going to need someone to drive me to the emergency room. My body ached all over. I was told it is a sign of getting in shape. I do not understand why being out of shape has to feel so good. I stuck with it, and I was so glad I did. I feel better. I look better…I realize this is subjective. One of the exercises we do in our boot camp is known as the plank. Basically, it is when you hold your body off the ground similar to a push-up position and hold it in a straight line. I have learned there is a right and wrong way to do them. The plank is one of the best exercises to strengthen your core, which I learned is more than just your muscles in your stomach. It is also includes the lower back, hips and buttocks.
Being the financial nerd that I am, I realized the plank exercise could be a great way to explain how to sustain and preserve long-term wealth. For example, no matter the fitness level during the plank exercise you will begin to shake, sweat and experience pain throughout your body. I know it sounds fun… like being electrocuted. Anyway, the point is the more planking one does the easier it gets. The reason…a stronger core. Similar to preserving and growing wealth over time you must have a strong core also known as a well thought out asset allocation. Just like the pain (volatility) experienced in the capital markets, relying on a well diversified asset allocation and sticking with it over time (discipline) ensures success as things go up and go down you can rebalance and take advantages of those opportunities to buy low, sell high.
I know it sounds so simple, but it is so difficult to do. In fact, there is a big disconnect between what investors think they make and what they actually earn.
“Typically, the studies find that the returns investors have earned over time are much lower than the returns of the average investment.” – Carl Richards, The Behavior Gap.
The reason is simple. Investors are relying on everything else (CNBC, friends, neighbors and anyone willing to offer up advice) rather than an asset allocation plan that focuses on balancing the risk versus reward according to you as the investor’s individual risk tolerance, goals, and investment time frame. Interesting fact: George Hood held the longest plank at five hours and fifteen minutes. We at Heritage are focused on the long-term, and while I don’t plan on planking for five hours, I hope this challenges you from an investment perspective to focus on the things that matter so you can stay up for the long haul.