Guest Post: What sailing can teach you about saving for retirement
Welcome Guest Blogger Rob Erich!
I first learned to sail on the San Francisco Bay. Battling 25 knot winds, dodging tankers, and racing against the ebbing tide is exhilarating! Anyone who calls sailing a bore has never experienced a summer on the Bay. The precision, focus, and teamwork necessary to make it back to port is every adrenaline junkie’s dream.
But sailing is more than just fun – it’s also a great learning activity. This is why many teams use sailing to teach teamwork, leadership, and even child development.
But one area where we rarely hear about the benefits of sailing is in regards to investing. Today we’re going to change that. These sailing tips can teach us a tremendous amount about how to save for retirement.
Here are four sailing tips every investor can learn from a day on the sea:
Plan the course before setting sail
Every good sailor knows that you must plan your course before leaving port. In addition to deciding where you want to go, you review depth charts and tide tables to gain a full understanding of what you’re up against. By preparing ahead of time, you can make it successfully to your destination without any surprises along the way.
When it comes to preparing for retirement, planning a course early on is just as critical. With most 401(k)’s averaging mediocre returns, saving 4% a year in an employer matching fund isn’t nearly enough for retirement.
The financially successful are those who have visualized the lifestyle they want in retirement, know at what age they want to retire, and have a clear path on how to get there. They’ve developed a plan ahead of time.
Maintain a steady course
When sailing in rough waters likes those in San Francisco, focusing on the waves can quickly throw you off course. The more you get distracted by the movement around you, the harder it is to keep the boat pointed in the right direction. However, if you focus on a distant landmark, it doesn’t matter how much the waves thrash about, your course remains steady – and you end up at your destination.
In the world of investing, there is continual change. Markets rise and markets fall. During all of this, those who fare the worst are those who try to predict what’s next – focusing on the short-term waves rather than the distant landmark.
Rather than worry about short-term losses, successful investors track their investments for the long-term and keep on course – even in rough waters.
Adjust your sails when the winds change
While every successful sailor knows to maintain a steady course, they also recognize the need to adjust the sails when winds change. Tightening up the lines results in a smoother and faster ride.
While an investor should never buy and sell on a whim, it’s still essential to anticipate long-term changes in the financial landscape. Just ask the investors who decided to keep their Barnes and Noble stock instead of sell it to buy Amazon.
Continually review your investments to ensure that they have long-term viability. This will prevent you from being surprised by a sudden and unpleasant change.
Prepare for the worst – and have fun
Good sailors plan meticulously ahead of time, make sure that the boat is insured, and provide everyone with a lifejacket. With all of these ducks in a row, the rest of the trip can be spent having fun and enjoying the ride.
Like sailors, good investors know it’s important to prepare for the worst – which is why they diversify. In fact, the majority of millionaires have 7 streams of income. This diversification prevents them from losing everything if one investment goes south.
Then, once their finances are aligned well, the financially intelligent are able to embrace life, spend money on things that matter most to them, and sleep soundly at night.
So start sailing!
Now that we’ve discussed how sailing tips can help your finances, it’s time to get back behind the helm. Meanwhile, as you prepare for your next adventure on the sea, spend some time brainstorming how you can better plan for your financial future as well. Future you will be thankful.
And who knows, maybe you’ll decide that your next investment needs to be a boat. Renting it out on Boatsetter could become your favorite investment yet.
Guest Author Bio: Rob writes about entrepreneurship and the digital nomad lifestyle on his blog Money Nomad. He also discusses personal finance topics for InvestmentZen. When not working, Rob enjoys traveling, sailing, and exchanging stories with strangers. You can find him on Twitter at @MoneyNomadRob.