No Shortcuts

Yesterday in the mail we got a flyer for some new gym opening near our house. I glanced at it on its way to the recycling bin. The advertisement was promising super-efficient workouts to burn more calories than average, and keep burning calories for days after! What a miracle.

I’m a fairly active guy for running a business and having little kids. I make sure to make time on the bike and probably ride 8-10 hours a week on average. Not a ton, but a decent amount. I’m not a fitness freak or a health nut. I don’t take supplements and have never done crossfit. Here’s what I do know about it:  Everybody is looking for a shortcut, to  burn more calories, make working out easier, to diet but eat ice cream.

You know why those “One Weird Trick” ads are all over the internet? Because people click on them. Lose weight, have a flat belly, whatever your heart desires. We desperately want a shortcut.

The problem is that fitness and dieting requires discipline. Sure, of of us are gifted with a faster metabolism or there are those freaks of nature who just don’t like ice cream (what is the deal with that?) but in general there aren’t too many shortcuts. Eat smarter/eat less, workout regularly, be more fit. Not too many ways around that.

Investing, as it turns out, is awfully similar. Shortcuts would be great. The financial version of the “One Weird Trick” advertisement is the local guy on the radio promising stock market returns without the risk. I have to tell you, if you think you can change your overall health and fitness by taking a supplement or eating some super berries, you’re going to be a sucker for what the financial industry can come up with.

Sure, it’d be great if you could net out a 7-8% return without any volatility. It’s also be great if you could spend every penny you earned and still find yourself financially independent after working for 20 years. Maybe somebody selling a whole life insurance policy will come up with a way to tell you that can be done.

But like fitness, there aren’t too many shortcuts in finance. If you have high blood pressure your doctor is going to tell you to cut out the red meat and onion rings and maybe go for a walk every day. If you want to be financially independent an honest financial planner is going to tell you to lve within your means and maybe pass on the 5,000 square foot home and the $65,000 SUV until you get there. I don’t have any shortcuts in the markets either. If you want equity-like returns, you have to take some risk. You have to develop and maintain an investment strategy that will work for the long term and you have to stick to it. There aren’t any crash diets in the markets that will let you earn 200% in 60 days and be set from there on out.

Finance requires discipline. Many people know I’m not huge on budgets, largely because it has been my experience that most people have lifestyles more than they have budgets. And most people’s lifestyles don’t change radically from month to month. But whether you use a budget or not, the key to success is discipline. It’s spending less than what is coming in just the same as calories in and calories out. If your budget provides discipline, good. But it’s the discipline that makes it work, not the budget itself. Whether we’re talking about your personal cash flow and lifestyle or your long-term investment strategy, you need discipline to make both work. No shortcuts, sorry.

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