In 2009 I decided to run the Boston Marathon.   Unlike most marathons, the Boston Marathon requires runners to qualify for their esteemed race so the earliest that I could run this marathon would be in April of 2011.   I launched a plan to make this happen and set out on a two year journey to realize my dream.   

In my early days of running marathons I just ran.  I ran without any plan.   My first marathon was the Los Angeles marathon in 1991.   I was in shape but did not have any type of strategy for training or race day management.   I was going to run as fast as I could for as far as I could.   I wore cotton and did not stop at any aid stations to drink water.   This “strategy” worked well until mile 20.   At mile 20 the wheels came off.   I was dehydrated and started to cramp.  The last 6.2 miles of this race were some of the worst of my life.  My lack of planning did me in on this marathon.

Can this running analogy help you as an investor?   I believe it can.  I have noticed over my career that most investors do not have a financial plan or investment strategy.    Most investors show up on race day and hope for the best.  This strategy of hope for the best usually does not end well.   A solid financial plan can help you create generational wealth.   A well-constructed financial plan can assist you with income generation, portfolio construction, risk management, tax benefits and estate protection.   The numbers also back up the many reasons why you should have a financial plan.  In an October of 2006 study done by Annamaria Lusardi and Olivia S. Mitchell in a paper titled, “Financial Literacy and Planning: Implications for Retirement Well Being,” [October 2006, page 26] they found that successful planners had 3 times the net worth of non-planners.   This is a significant number and it should not be ignored.  As Eleanor Roosevelt once said, “it takes as much energy to hope as it does to plan.”  

So how did I do with my Boston Marathon plan?  I qualified for Boston by running the 2010 Austin Marathon.   I ran the Boston Marathon in April of 2011 on a gorgeous Monday morning.  It was my perfect race.   The weather, the crowd, the course and my time all exceeded my goals.  I was able to PR in this race due to my two year plan.

Bill Parrott is President and CEO of Parrott Wealth Management, LLC.

10/19/2015