“Financial Fitness”

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A proper financial plan includes elements very parallel to a proper workout plan when striving towards success – however you define it.

I overheard some women having a conversation about “results” while I was at the gym earlier this week and it got me thinking about how a proper workout regimen is very much like a proper investment management plan. The conversation went something like this:

“I’m so upset.  I’ve been going to this body pump class since May and I haven’t seen any results…”

“What are you talking about, you look great” (a friendly white lie).

Granted, I don’t know this woman, but I made my judgments and thought to myself that there could be several factors contributing to her disappointment.

1. How often is she going to this class?

Much like investing, a disciplined approach pays off – success is very much dependant on being persistent. Having a plan in place is the only way to know where you are heading and to measure your progress along the way. This plan ought to include such considerations as your time horizon, your appetite for risk, investment knowledge and specific goals. As your needs and markets evolve, periodic review help to ensure that your plan is still relevant and on track.

Time horizon is a big consideration for this woman.  Six months of this “body pump” class may not have yielded the results she was hoping for when you consider the intensity level vs. the time she was dedicating – much like risk vs. reward when relating to investment strategies.

Many people get impatient when it comes to investing – which is why time horizon is so important.  If it’s a long-term strategy, like your health, it should be a long-term plan and not a quick fix.  Sure, there are short term goals along the way (aka beach body time) but you get the point.

2. Has she been lead to believe that this “body pump” class is a miracle class?

There really isn’t a silver bullet to success.  When it comes to being fit, there really aren’t any secrets.  If you want to lose weight it’s a question of calories in vs. calories out. Simple.

It’s no different when it comes to money.  In order to build wealth, you have to watch your spending, save well, invest wisely and follow a disciplined financial plan. Many of us look for the short cuts to wealth and when we do so, it usually ends up badly.

Managing your expectations in both realms is very important. You can’t be super-fit and at your best everyday.  When it comes to investing, you have to expect that the market isn’t going to behave the way you want it to.  Emphasizing again the importance of having a disciplined financial plan – not only does having a plan get you where you want to go, but it can give you the confidence to act in your own long-term best interests, rather than simply reacting to a volatile short-term environment driven by emotion and media. If you aren’t willing to see your account values decline from time to time, you’ll find it hard to stick with your strategy and when left to our own emotional devices, one will buy high and sell low.

3. Is this the only form of exercise that she is relying on? 


No matter how great this “body pump” class may be, I know for certain that she isn’t getting a well rounded workout.  She has to compliment the class with a few other forms of sweating – like some cardio, heavier weights and yoga for example.

Relying solely on the body pump class would be like investing all of your money into one single stock or asset class – way too risky.  Diversification and asset allocation have proven to be the most effective way to mitigate the many different risks to which your financial assets will be exposed.

4. What are her eating habits like?


Don’t quote me on this, but I once read that your results are based 80% on what you are eating. This theory alone could explain the problem. Working out everyday while indulging in burgers, fries, pizzas and ’pops’ isn’t the way to see results.

Your diet ought to be a healthy balance of carbohydrates, fats and proteins…much like a proper asset allocation would include a strategic mix of equities, fixed-income and cash. You can shift the balance of these segments based on your life milestones and goals; for example, eating less carbs or fat when you are trying to lose weight and shifting to more fixed income when aiming to preserve your money instead of grow it.

5. Is she working with a trainer?


There is nothing worse than seeing someone misuse equipment at the gym. They risk hurting themselves and others and it’s a frightening spectacle.  When it comes to money, the same dilemma exists if you don’t know what you’re doing – and you’re not alone.

Financial planning should be taught in school as a life skill – but it isn’t – and that’s why I am so passionate about financial literacy. You can choose to be as involved as you want, however having a transparent understanding of your options, your plan, where we are today and where we are heading is vital to your financial health. You can think of me as your “personal trainer” for money – guiding you through each life stage in the most strategic and disciplined way, keeping you on track to finding success – however you define it.

If you’d like to discuss your financial fitness further, please contact Dian at 416.842.4234 or dian.chaaban@rbc.com. Learn more at www.dianchaaban.com

This article is supplied by Dian Chaaban, an Investment Advisor with RBC Dominion Securities Inc. Member CIPF.

This information is not investment advice and should be used only in conjunction with a discussion with your RBC Dominion Securities Inc. Investment Advisor. This will ensure that your own circumstances have been considered properly and that action is taken on the latest available information. The information contained herein has been obtained from sources believed to be reliable at the time obtained but neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers can guarantee its accuracy or completeness. This report is not and under no circumstances is to be construed as an offer to sell or the solicitation of an offer to buy any securities. This report is furnished on the basis and understanding that neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers is to be under any responsibility or liability whatsoever in respect thereof. The inventories of RBC Dominion Securities Inc. may from time to time include securities mentioned herein. In Quebec, financial planning services are provided byRBC Wealth Management Financial Services Inc. which is licensed as a financial services firm in that province. In the rest of Canada, financial planning services are available through RBC Dominion Securities Inc. RBC Dominion Securities Inc.* and Royal Bank of Canada are separate corporate entities which are affiliated. *Member-Canadian Investor Protection Fund

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