October is here and for sailboat racing fanatics like me, it signifies the end of the sailboat racing season on the San Francisco bay. As an avid sailboat racer and a Certified Financial Planner®, I wanted to share my thoughts on how a successful personal financial plan and a well-executed sailboat race are very similar. Often I have looked out on the Bay and seen casual sailors meandering around the bay. They don’t seem to be going anywhere and sometimes even look a bit lost and it reminds a great deal of many investor’s who don’t have a financial plan. Sailboat racers on the other hand always have a plan and everything they do is tuned towards that plan. Investing with purpose with a well thought out financial plan is much the same as a professional sailor sailing a racecourse. The racecourse is your life plan (goals and ambitions) and the way you sail around the course is your investment strategy. Every sailboat race has a start and a finish, and you can bet that all good skippers have a plan BEFORE they start the race. Also, due to changing conditions on the water, that plan may need to change and be adaptable. When investing with purpose, like sailboat racing, investors must have a plan that is straightforward and flexible. That plan must outline the investor’s goals and develop both a financial plan for retirement and an estate plan to make sure when the race (life) is over, the next generation can benefit from the investor’s proactive planning efforts. Once the race starts, it is all about getting clear air, trimming your sails, and making tactical moves to avoid costly mistakes.

Unlike cruising, racing is a very defined sport and each person on the crew has a defined position. The two most essential crewmembers on a boat are the skipper (the investor) and the tactician (Financial Planner/Advisor). The skipper’s job is to drive the boat, stay focused on what he/she is doing, and the tactician is there to help execute on the best strategy. The tactician helps with the strategy by calling wind shifts, watching for currents, avoiding the mistakes that can cost the skipper the race. Similarly, a good financial advisor can add value to the investor by helping him or her create a plan, watching for market shifts, identify emerging market trends, and help avoid investing mistakes. The first part of a race is the start. All racers have a plan when they start—the race is not a leisurely cruise and a plan at the start can make the difference between first and last place. Once the race has started, the skipper goes upwind towards the weather mark. This is where the investor builds his/her wealth. Since sailboats cannot sail directly into the wind, they must tack back and forth and be the first boat to the weather (upwind) mark. Similarly, investors cannot plan on making investments with linear returns, investing requires discipline and many tactical shifts along the way to your goal. This process of wealth accumulation is no trivial matter—strategies must be developed, and mistakes must be avoided. This is where finding the right wind and current and sailing in “clear air” can make the difference between retiring and retiring well.

Now that the investor has successfully navigated the upwind leg of the course and rounded the weather mark, the investor has built most of their nest egg. The investor must focus on continuing to grow that portfolio while concurrently protecting the position on the course. This leg of the race is called the downwind leg, and this is where the skipper can gain on other boats but the emphasis is on protecting their position. For the investor, this leg is where compound interest and taking a slightly more conservative approach is more important than accumulation.

The final leg of the course gets extremely tricky once an investor rounds the leeward mark at the bottom of the course. This is essentially the retirement phase. The investor’s portfolio now must continue to grow and outpace inflation as well as supplement their income on your way to the finish line. This is perhaps the trickiest part of the race and execution of your strategy right now is the most critical part. All the work you have put in on the race comes down to this point. This is the true test of success or failure in your planning and execution of your plan.

RHS Financial is there to help you at every step of the way with your financial planning and investment needs. Let us help you navigate the waters to success and stop just investing and start to invest with purpose®

Disclosures: This presentation is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by RHS Financial, LLC unless a client service agreement is in place. Please contact us at your earliest convenience with any questions regarding the content of this presentation and how it may be the right strategy for you. For actual results that are compared to an index, all material facts relevant to the comparison are disclosed herein and reflect the deduction of advisory fees, brokerage and other commissions and any other expenses paid by RHS Financial, LLC’s clients. An index is a hypothetical portfolio of securities representing a particular market or a segment of it used as indicator of the change in the securities market. Indexes are unmanaged, do not incur fees and expenses and cannot be invested in directly.