7 ways investing is like long distance running

• Investing is a lot like long-distance running; sometimes the hardest part is just getting started.
• Exchange Traded Funds (ETFs) can be a great option for beginning investors as they can help you create a diversified portfolio and alleviate the challenges of choosing individual stocks or sectors.
• One you start running, or investing, the key is to have a disciplined approach so you have a better chance of staying in the race for the long run.

I often marvel at how running and investing in markets have so much in common. Since running my first marathon in 2004, I have run 25 marathons, about 50 half marathons, 10 triathlons, and countless other shorter distance road races. During the same period, I navigated some severe market dislocations and have been exposed to countless bull and bear markets as as a sell side market maker, a buy side trader, a portfolio manager investing, and an investment strategist for the largest ETF provider. 

Here are some of the lessons that running has taught me about investing.

1. Just get started

The journey of 26.2 miles starts with a single step. Sometimes the hardest part of the workout is deciding to get up from the couch and lace up for a run. Similarly, investing can be complex and overwhelming for first-time investors, and we often suffer from “analysis paralysis”. If you are a new investor and thinking about investing in the markets, just start with a single step towards your financial journey. 

Exchange Traded Funds (ETFs) can be a great option for beginning investors and can be used to create a diversified portfolio. For example, iShares Core asset allocation ETFs are designed to be simple way for investors to build a diversified portfolio, providing exposure to potentially thousands of stocks and bonds. The iShares Core Growth ETF Portfolio (XGRO), for example, holds roughly 9,000 stocks and 11,000 bonds¹. Similar ETFs are built with conservative or aggressive risk targets; the key differentiator being how much of each fund is invested in stocks vs. bonds.

A mistake some investors make is waiting to invest because they think they need a lot of money to get started, which is not the case. ETFs can help you begin investing as soon as you want and you can start with as little as $20 when you buy one unit of iShares ETFs Just like your marathon training, your investment training plan will be key to your success after the first step is taken. It should guide you based on your unique needs - how much money you expect to need, when you expect to need it, and what are upcoming events that you need to plan for. What kind of risks are you willing to take? What kind of returns might you make for those risks. That training plan will guide you after you take the first step. (Read about How to find your asset allocation and risk tolerance.)

2. Diversify the training

When I ran six days a week and did yoga only once a week I was a horrible runner. When I did yoga three days a week and ran four days a week I became a much better runner. Diversifying your training regime is key to success in running - and other forms of strength training. 

In your investments, ETFs make it fast and easy to invest across a diversified portfolio. For example, you can access the broad Canadian stock market with the iShares Core S&P/TSX Capped Composite Index ETF (XIC), or access 500 of the largest U.S. stocks with the iShares Core S&P 500 Index ETF (XUS)

There might also be potential benefits of adding exposures outside of Canada and the U.S., such as international developed markets and emerging markets.

3. Run your own race

On race day, you don’t know what other’s goals are. Some are trying to set a new personal best time, while others are doing it just to finish. You don’t compete with other runners. Ultimately, you’re only competing with yourself to have your best race. The same is true with investing. If your best friend or favorite market analyst is putting all their money in frontier markets, that may not be the best approach for you. Invest based on your personalized plan, which probably won’t look like the investing plan of the person next to you.

4. Your training discipline determines how you feel on race day

Banging out 30-50 miles a week, week after week can be grueling but the discipline will prevent you from bonking on mile 15 on race day. Similarly in investing, you have to do your research on markets (or follow great market thought leaders.) But only you can dictate your investing discipline. Understanding how you should size a certain trade, when to cut your losing position, or when to add to winning positions, is all about building a plan and sticking to the plan with discipline.

5. Pace yourself

When I finally broke four hours in a marathon after years of trying, my first half was well over two hours. The previous years I had done 1:56 or 1:57 halves and still not been able to break four hours. It’s all about pacing. In investing, the same principle applies. You are in this race for a long time. Stay invested for the long term, add to your portfolio in a measured way, and don’t go “all in” on one incredible theme or stock and try to “kill it” in one mile only to suffer down the road.

6. Plan for the unexpected

Hip stress fracture during training, race day weather 30 degrees over normal, cramping at mile 15 and having to walk, and a racecourse running out of water by mile 10; these are all real obstacles I’ve faced as a runner.

Similarly, during your investment journey of 50-plus years there will potentially be recessions, bear markets, countless liquidity crises, bank failures, rate hike and cutting cycles, inflation, and deflation — just to name a few events that can trip up an investor. You can’t control the volatility, but you can control your reaction to it. Make tweaks to your portfolio based on your macro assessment and personal needs and try to stay invested for the long run. (Read our market insights for current views and timely investment ideas).

Remember, no one can really time the markets — but we can just stay invested and remind ourselves that we are in this for the long run. It’s a marathon after all!

7. Stay calm and carry on

Just like in the market, every race has its ups and downs — sometimes quite literally if the course is hilly. The key to running a successful race is to push through the rough spots without getting too upset, and to enjoy the periods when everything feels great without getting complacent or losing focus. The same is true with investing, where keeping your emotions in check no matter how good (or bad) your portfolio is doing at a given moment is critical to staying on track to reach your long-term goals.

If you haven’t noticed, I’m passionate about running and believe it has helped me professionally. Running just works for me: On the worst market days, I often console myself with a run — and reward myself with the same on the best market days.

Maybe running isn’t your thing but hopefully the lessons I’ve learned from putting in the miles can help you on your investing journey.