Summer isn’t here yet, but it’s getting close. And for many people, the arrival of summer means it’s time for swimming at the local pool or lake. If you’re just a casual swimmer, you probably don’t have to adjust your diet before jumping in. But that’s not the case with competitive swimmers, who must constantly watch what they eat and drink, particularly in the days and hours preceding their races. While you may not ever have to concern yourself with your 400-meter individual medley “splits,” you can learn a lot from swimmers’ consumption patterns — particularly if you’re an investor.
For starters, to sustain energy and stamina for a relatively long period of time, competitive swimmers need to eat easy-to-digest carbohydrates such as whole wheat, whole grains, apples and bananas. When you invest, you want to build a portfolio that is capable of “going the distance.” Consequently, you need investments that provide carbohydrate-type benefits — in other words, investments with the potential to fuel a long-term investment strategy. Such a strategy usually involves owning a mix of high-quality stocks, bonds, government securities and certificates of deposit (CDs). By owning these vehicles, in proportions appropriate for your risk tolerance and time horizon, you can help yourself make progress toward your financial goals — and lessen the risk of running out of energy “mid-stream.”
Of course, competitive swimmers have to be diligent not just in what they do eat but also in what they don’t. That’s why they avoid sweets, such as sodas and desserts, when it’s close to race time. These items do not provide lasting energy — in fact, they actually sap energy once the sugar wears off. As an investor, you, too, need to avoid the temptation of “sweets” in the form of high-yield or “hot” investment vehicles. You may find some of these investments to be alluring, but you will need to carefully weigh the extra risks involved. For many people, these types of investments may not provide the long-term stability needed to help maintain a healthy, productive investment portfolio.
While what swimmers eat, or don’t eat, is important to them, their drinking habits are also crucial. The competitive environment — warm pool water, warm air temperatures and high humidity — can quickly lead to dehydration, so swimmers need to drink sizable amounts of water and sports drinks before and during practice. And you, as an investor, need your own type of liquidity, for at least two reasons. First, you need enough cash or cash equivalents to take advantage of new investment opportunities as they arise; without the ability to add new investments, your portfolio could start to “dehydrate.” Second, you need enough liquid investments — specifically, low-risk vehicles that offer preservation of principal — to create an emergency fund, ideally containing six to 12 months’ worth of living expenses. Without such a fund, you may be forced to dip into long-term investments to pay for unexpected costs, such as a major car repair, a new furnace or a large bill from the dentist.
So the next time you see competitive swimmers churning through their lanes, give a thought as to the type of diet that is helping propel them along — and think of the similarities to the type of “fueling” you’ll need to keep your investment strategy moving forward.