Last week I went hiking. Nothing crazy, just a short little hike to the top of a local mountain.
Being a personal finance blogger, I’m forced to draw correlations between everything I do in real life, and how it applies to investing. The crazy thing is, the more I thought about it, the more I realized that holy cow, hiking is a lot like investing!
Think I’m crazy? Check it out.
It Always Looks Easier from Far Away
Before you start hiking, it always seems easier than it really is. That’s the truth. Just look at that “tiny” little mountain I hiked up: easy! But that suddenly changes when you’re at the base of the mountain.
The same is true with investing. It’s easy to say, “Hey, I can invest!” But actually figuring out how to invest is hard. That’s why we’ve made courses and coaching available through our Investing 101 class. Not to sugarcoat anything, but investing and hiking are both hard work and take serious effort.
Getting Started Is the Toughest Part
Once you get to the base of the mountain, you have to get started. When hiking, I’ve always felt like that first mile was the hardest. Once you get going, it eases up (mostly because you get used to it).
Again, the same is true with investing. Getting started is tough, but once you nail the basics and set up your portfolio, the rest is “easy.” It’s easy in the regard that you don’t have to do any more work for it, and it should be growing for you.
Once You Get into a Groove, It Goes Quickly
After I conquer that first mile, I tend to get in a groove. My pack suddenly feels lighter, my legs just want to move, and the path just opens up in front of me. Hiking does become much easier once you get into a nice groove.
With investing, once you set up everything, it’s pretty much on autopilot. You may have to rebalance or course-correct a bit here and there, but really, it should work for itself. This is the groove you need to make money!
The Peak is Retirement
Finally, you reach the peak. When you hike, this is the goal: to make it to the top. You can take a break, eat a snack, drink some water, and enjoy the view. I know when I get to the top, I savor it. Heck, I see people taking pictures and really just enjoying it.
I equate this part of hiking to retirement. The peak is your party. You’ve put in 40 hard years of work, and now you get to enjoy your cake. Celebrate the moment — you’ve earned it.
The trouble with the peak is that you can’t stay there — not when hiking and not in retirement. It’s temporary. So live it up for the time you’re there, but you do have to get down the mountain.
Going Downhill is a Workout in Itself
Now, you’ve got to make it back downhill. I hate climbing back down the mountain — it makes my legs burn! I do find that going down seems to go much quicker than going up, but it’s still tough. Plus, you don’t want to slip — going down doubles your odds of a slip and fall while hiking.
That’s true with investing in retirement as well. After the peak (i.e., retirement), you know are investing to draw down on your money. This is tougher than accumulating your money — you have to draw the right amount and hope your income will last you. Feeling the burn?
That’s what makes retirement (and hiking downhill) so tough. It takes a lot of work, and you have to be very careful. If you slip up in drawing down your retirement savings, you could find yourself broke at 90 years old, and that’s terrible.
I’d love to hear your thoughts. Do you think my analogy holds up? Do you have anything to add, or do you disagree?
P.S. Bonus points for anyone who can guess the name of that mountain I hiked!
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here and here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.