Introduction
Wealth building is a practice that lasts a lifetime. I’ve been humbled, blessed, and fortunate to have practiced it consistently since graduating from University in 2003 when I started my professional IT career. However, from 2013 until 2018 I was also a competitive road cyclist and the lessons I learned from this incredible sport made me an even better investor, saver, and more suited for wealth building. This article is about sharing the lessons I learned which I hope will help with your own long term wealth building goals.
My Last Race
The title picture above is from the last race I competed in; yep that’s me! It is from the Tour De Bow 2018 Criterium race. I trained 10 straight months in preparation for that race and bombed out because my shoes would not clip into my pedals. It was heart wrenching and tremendously disappointing. Two months later I was diagnosed with ulcerative colitis and this disease forced me into retirement from this terrific sport.
Lesson 1: Long Term Results Rely on Short Term Consistency
Daily consistent training mixed with some rest days each week is required in order to see substantial gains or performance increases over the years.
It was a frustrating lesson to learn that after riding and training hard for a week or two I didn’t see much results. However over the months and years my improvements were dramatic.
The same is with investing and wealth building. Regular consistent saving and investing is required to see substantial increases in net worth over the years. It can be difficult to see substantial growth and improvement over one year, but keep at it, and you can literally revolutionize your life over the course of 10 years.
Lesson 2: We Need a Foundational Base First, Then We Specialize
There is no replacement for foundational fitness in all areas of competitive cycling. You must first have a strong aerobic or cardiovascular base of fitness before you can develop into a strong competitor. This can take a year or two, sometimes longer, depending on your genetics and starting fitness.
Likewise in finance, we need to have a strong financial foundation first. We do this by first budgeting and then investing across all asset classes, all while avoiding consumer debt and paying down our necessary debts like student loans and mortgages.
Once we have a solid foundation in place, we can start specializing and becoming more competitive. We do this by adding individual stocks, speculative assets, investment properties, or fully own businesses. Of course, these are all optional, but the point here is we always need a strong foundation first.
Lesson 3: You Will Never Win Unless You Take a Risk
While racing, you quickly learn that you cannot win any races unless you take a risk at least once during the race. Part of the sport is knowing when to take this risk, and trying to see if you can’t take two or three and make a difference. If you play it too conservative and avoid taking a risk you will never win; but take too much risk and you will burn out and fail to complete the race. So while it is a balancing act, the fact remains that you must take a risk at some point during the race if you aim to win.
I’ve learned the same with saving, investing and personal finance. If we play it too conservative our investments just won’t return the needed growth to cover inflation and increase our future purchasing power. This isn’t to say we should seek out risk at all costs. No, it’s saying that after we have that foundation in place, we need to take some good calculated risks and generate some returns for the win.
Image Caption: 2018 Velocity Stage Race Criterium. The fellow in the middle with the yellow shoes was a beast – absolutely wrecked us. Somedays you’re the hammer, other days you’re the nail!
Lesson 4: You Must Be Able to Handle Bad Days
Somedays we have all the best intentions, we are mentally prepared, feel physically ready to train or race, but things don’t happen as we had planned. Sometimes I would get a flat tire, break a chain, or other mechanical failure I could not foresee. However, even still, from a physical training point of view sometimes all the preparation done would still result in a bad day on the bike. I soon learned that I would need to roll with it and move on to the next day. The quicker I could move on, the better.
From a wealth building standpoint, sometimes we do all our due diligence prior to taking a position in a stock or ETF, we take that position, and then it doesn’t work out. Sometimes, there is a lesson to learn, but other times the market will correct or crash and there was nothing we could do to prepare for this. We must be capable of rolling with it and live to invest another day.
One defining characteristic for successful wealth building is being able to hold and even buy during market downturns and crashes. There is a near 0% chance you will never experience a crash during your time as a long term investor. So, with this in mind, we must have the inner fortitude to hold through bear markets and even add to our core positions. Otherwise, you risk selling at the worst times, and once conviction has returned, you’re buying at much higher prices.
Lesson 5: Most Of the Time We Go Conservative and Easy
The majority of the time spent training is done at a maintainable pace and done to conserve energy for later on. Even when doing hard interval training, if you summed the valleys and peaks, the time spent going easy is still the majority. Now, don’t get me wrong, we did spend time absolutely hammering it hard, and turning ourselves inside out, and trying to reach higher levels of peak power, but the primary purpose was to always improve our base and foundational fitness.
So too it is with finances and investing. I’ve learned the only way to reach for the top is to have a strong financial base to fall back on. Having that base or foundation in place allows for emotion free investment decisions and avoid knee-jerk reactions and sell at the worst times.
This has been a critical lesson for me – that we should spend the bulk of our time focused on our financial foundation and strengthening our base so we can pivot quickly and make smart risk adjusted bets to increase our wealth building efforts.
Image Caption: One of the best days on the bike I ever had. Me and my buddy Martin riding in California the day before Levi’s Gran Fondo. I’ll forget most races, but I will never forget these.
Lesson 6: We All Have Limits No Matter What
This was a difficult lesson for me to learn; and were it not for competitive cycling I would never have learned it. Much of the messaging today reinforces the idea that anything is possible and if we will it, or manifest it, it will come true.
This lead to me believe that if I trained hard and put in the hours on the bike I could become the best cyclist in my area. But sadly, for me, this would never be the case. During my entire career I lost to guys who put in less time and less effort, and this was very humbling and frustrating.
It is difficult to communicate just how hard I trained and how dedicated I was to this sport. I honestly believe I achieved 101% of my physical limitations when it comes to cycling. I left nothing on the table: wake up early, train hard for an hour or two before work, train so hard I could taste blood, get to the point of nearly fainting, and then recover nice and easy for a day or two. On the weekends I would ride for hours putting in 80-100 miles with thousands of feet of climbing.
In the end, I learned there are physical limits to how much blood my heart can pump, and how quickly my circulatory system could move the oxygen from my lungs, into my working muscles, and how much weight I could lose. The fact remained, my genetics were far from perfect and I was running up against them time and time again. Please understand that I’m not making excuses, I pushed hard to try and expand my capabilities and improve my fitness, but the limits imposed by my genetics would not budge.
Not Just Physical Limits Either
It wasn’t just physical too, there is also a strong mental requirement to be a successful cyclist and while I believe I am mentally tough and resilient, you also need the mind for taking the right risk at the right time, and being able to read the race well. I didn’t have a natural knack for this and it would compound against my physical limitations.
I know this is getting long, so I’ll cut it short here. But this lesson has been a powerful reminder to me in my professional and personal life that myself and others do have physical, mental and financial limitations that need to be respected. Our capacity to work long hours, solve complex problems, or understand certain technologies could be limited and therefore restrict our path forward. I’m sure you can see the parallels here and how this plays into our wealth building practices.
Lesson 7: Over Nerdification Of Data Leads Nowhere
The amount of data available to the modern competitive cyclist is overwhelming. Power, Threshold, Heart Rate, Aerobic Decoupling, Sweet Spot, Max Power, Training Stress Score, the list goes on and on. It can get to a point where the fun and enjoyment of cycling is completely removed and you feel like an organic machine purposed to generate watts into forward momentum. In the end, what matters most, is if you can ride hard, fast, and keep up with your buddies, you will enjoy cycling.
The same is very true with finances and investing. There is way too much data, charting, analysis, and the like. I won’t mention the metrics, but if you are into options trading you know what I mean. In the end, we can make an incredible difference and improvement to our personal finances by keeping it simple, minding our expenses, keeping a budget and investing into low cost index funds. Rinse and repeat over the long term and you’re a millionaire. What more do you want?
Image Caption: Start of my last time trial race; I didn’t know it at the time and I set a personal best. These races are a cruel and unusual form of punishment. Insert barf emoticon here.
Lesson 8: If You Go Too Hard Too Soon You’ll Burn Out
One thing you learn quickly in your racing and competitive cycling career, is if you go too hard too quickly you will burn out and literally have to quit the race. Your body will begin to shut down and you will ‘bonk’. We all have a limited capacity to burn energy and remove lactic acid from our working muscles. While these energy systems can be trained and increased, that upper limit is always there. The best racers know how to pace themselves and know when to dig deep at the right time. Dig too hard, too soon, and you could be paying for it later in the race.
I find with investing it’s pretty much the same. The best investors are those who have the long term game in mind and know how to pace themselves. Going too hard, too quickly can often lead to over extending ourselves, abusing leverage, and selling when prices are low. We would do better to just keep it simple and keep a long term plan in mind.
I would be remiss if I didn’t mention the benefits of dollar cost averaging, as this tends to even out our timing risk and help us keep the long game in mind. Buy a bit of assets each month and stack them in your investment portfolio. Stay within our limits and just keep chipping away at it and soon you’ll have an incredible portfolio worth literally millions. I kid you not.
Bonus Lesson: Training and Showing Up Makes You a Winner Already
Wealth building, generating returns, and achieving financial independence are goals and aspirations most people have. By just simply studying the principles of finance, reading good books on how investments work, and practicing smart long term investment principles you’re already ahead of the pack.
I entered over 100 races over my 5 year career and won only 1 race, and 3 podiums. I finished in the top 10 a total of 5 times. Other guys I raced with would seemingly end up on the podium every race. Never mind these super talented super gifted racers; never mind the super wealth, rich and famous. There will always be someone better than you, but you can easily smash the vast majority of all others by just taking your finances seriously and ‘showing up’ to compete.
Always remember if you’re budgeting, saving, and investing prudently you’re already ahead of more than 80% of the population. Layer on a few smart bets and opportunities and you can land yourself wealthy and rich.
Final Words and Wrap
You know its funny the things you learn in one area of life, and how they translate into the other areas; but they really do. The lessons I learned from my competitive cycling career have made me a better investor and these have been my 8 key lessons and take-aways from cycling that make me better at wealth building.
I hope you’ve learned something and are able to be a wiser investor based off my experiences! What have you learned in other areas of life that have made you a better investor? reach out to me on email or twitter!
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