Drivers start your engines!
Today marks the 104th running of the Indianapolis 500 – “The Greatest Spectacle in Racing.” Drivers will travel at speeds of 225 miles per hour or more in pursuit of auto racing’s most iconic trophy. The 1911 winner, Ray Harroun, averaged 75 miles per hour, slower than some currently posted highway speed signs.
Race day is exciting, and the spectacle is legendary. Crowds of people usually pour into the brickyard to be part of the scene, and millions more will watch it on TV. The singing of our National Anthem, the singing of “Back Home Again in Indiana,” and the stealth bomber flyover add to the enthusiasm of the day.
Most of the attention will be on the 33 drivers, and rightly so, as they’ll be the ones responsible for executing the plan. However, behind them is an army of support staff like strategists, spotters, spouses, and owners. Teams work as one to make sure the driver can win the race by strategizing and planning for a successful outcome. The plan is their road map for the race. As the race continues, they must adjust their strategy based on new data like car performance, track conditions, and weather.
In addition to a fast car and the driver’s skill, they’ll need a little luck to win. In 2011 Dan Wheldon was trailing the winner until the last lap when J.R. Hildebrand’s car hit the wall on the final turn. Hildebrand’s accident allowed Wheldon to win. Wheldon would’ve finished second, at best, had Hildebrand not crashed.
Regardless of how fast these cars travel, drivers will pass each other often and spend a majority of the 500 miles jockeying for a position to win. Drivers need to focus on their team goals, trust the process, and not worry about the competition.
Unfortunately, drivers may experience a crash. When this happens, the yellow caution flag will fly, and drivers must slow down for the cleanup crew to clear the track before racing can resume. Accidents and crashes are unexpected, of course, so it’s best to try and minimize the damage. Drivers do not live in fear of a crash, and nor should you.
What can an investor learn from the Indianapolis 500? Here are a few thoughts.
- Drive your race. People travel at different speeds to reach their goals. If you’re on the right track, don’t worry about others. Your plan only applies to you and your current situation.
- Create a financial plan. Your plan will help guide you through the race of your life. It will be your roadmap to success.
- Adjust and review your plan. Drivers adjust their plans based on new data. As you review your plan and goals, you should adapt to new data as well. Flexibility is paramount.
- Work with your team. A driver relies on their team to win, and your trusted advisors can help you reach your goals. A CPA, attorney, real estate agent, mortgage broker, insurance agent, financial planner, and an investment manager should be in your pit crew.
- Diversify your investments. In the market, like racing, crashes happen. It’s not possible to predict when they will occur, so your best defense is a diversified portfolio of stocks, bonds, and cash.
- Celebrate your wins. It’s essential to enjoy the fruits of your labor. If you’ve reached a goal, celebrate it with gusto – and milk!
After 500 miles, the winner will capture the checkered flag, drink their milk, and kiss the bricks at the finish line. The team will celebrate the victory for a few days and then start planning for the next race. You might not pass under a checkered flag when you’ve achieved your goals, but you’ll know when you’ve won your race.
Nothing compares to the Indianapolis 500. ~ Mario Andretti
August 21, 2020
Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is T.D. Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.
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