Where the Real Winning Happens
Through 41 games of the 2016-17 NBA season, the Miami Heat stood at 11-30, good enough for the second worst record in the league. Coach Erik Spoelstra and the Heat looked like a lock for the NBA lottery and the Markelle Fultz sweepstakes.
Over the course of the next three months, the Heat went on to post a 30-11 record, which included a 13-game winning streak. They finished the season 41-41 and nearly made the playoffs. So, what exactly changed leading into the second half of their season?
“Everybody wants an ‘ah-ha’ moment; there hasn’t been [one],” Spoelstra said. “What it is, is boring, methodical, incremental and not even straight-line improvement. It’s what nobody wants to hear nowadays in this millennial generation. It’s not an overnight thing. It was two steps forward, one step back. One step forward, three steps back.”
Peter Attia is an M.D. focused on longevity and optimal performance. On a recent Invest Like the Best podcast, Attia discussed the idea of compounding benefits as it relates to your own health.
“Health is the most biologically important manifestation of compounding. We tend to think a lot of things that go wrong and they appear suddenly. So and so died of a heart attack. Oh, so and so got cancer and within a year they were dead. And, as tragic as those things are, we have to remember none of those things happened in a moment. Nobody just has a heart attack or just gets heart disease or even just gets cancer. These things are occurring for generations before.
With all that said, if the objective is to increase (one’s health span.) I’ll spare your listeners the strategy for how you do that because that in of itself is really a long discussion. What you’re really asking now is what are the tactics. It’s basically anything and everything that you can manipulate that can move those levers. Everything about how you eat, when you eat, what you eat, how you sleep, how you exercise, how you manage external stress, what drugs you take, what hormones you take, what supplements etc. and learning the ability to avoid harmful behaviors.”
Having the Spoelstra/Attia mindset is critical when optimizing one’s financial well-being. Rather than evaluating each financial planning decision as an isolated event, more focus should be put on the importance of stringing together repeated habits.
- Saving 15-20% of your income doesn’t do much in a year. Over 30 years, you’ll realize that it was the primary driver in achieving financial independence.
- A sub optimal asset allocation that costs you 0.75% per year is a rounding error. Over 30 years, it is likely to have reduced your portfolio balance by a significant amount of money.
- Paying more tax than you needed to in a single tax year isn’t the end of the world. Over 30 years, it’s real money.
- Trying to time the market probably won’t make or break your retirement in one year. Over 30 years, it may cost you significantly.
- One year portfolio returns get the news headlines. Yet, their impact is usually minimal compared to an investors ability to absorb blows and stay disciplined investing over 30 + years.
What goes into a successful household balance sheet is usually not a massive inheritance. It’s generally not the IPO stock that went bananas in a short period of time. These events help, but they are the exception - not the rule.
What makes a successful household balance sheet is automated savings habits. Living within your means. Rebalancing the portfolio systematically on a regular basis. Minimizing interest payments on a credit card. Preparing contingencies to see through unexpected setbacks in your financial plan.
A successful household balance sheet is the result of sacrifice, good habits, thoughtful decision-making and consistency over a long period of time. These repeatable behaviors compound over decades and lead to non-linear benefits that are hard to imagine at the start of the journey.
Players putting in individual work after one practice did not lead to a 13-game win streak for the Miami Heat. Eating apples for a week will not advance your health span in itself. Paying off a high interest student loan likely won’t change your lifestyle right away.
These are not single panaceas. In isolation, their impact is minimal. Done repeatedly over time as part of your plan, their impact can be significant.
Little things do matter. It’s where the real winning happens.
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Sources:
The Vertical: Yahoo Sports
The Investor’s Field Guide: Invest Like the Best
