AT FIRST GLANCE, personal finance might appear to have nothing in common with the world of personal fitness. I’d argue otherwise.
Perhaps the clearest parallel is between the gains from diligent investing in low-cost index funds and the gains from proper diet and exercise. Both are hardly noticeable at first and, as a result, there’s a temptation to stray. But if we continue the process of saving and investing—or eating correctly and exercising—we can see tremendous gains over time.
There is, however, another analogy—one I recently came across in an article discussing the rampant use of steroids in the fitness industry. The use of anabolic steroids among bodybuilders is widely known. But did you know that many famous fitness social media influencers, and even some of our favorite Hollywood stars, have likely bulked up using performance-enhancing drugs? The short-term gains are remarkable, though they mask significant longer-term health costs.
Many fans don’t realize that these fitness gurus are effectively lying and cheating their way to profits. For average folks, the consequence is severe disappointment when they don’t enjoy results similar to those they emulate.
As a 40-year-old who has worked out regularly since he was 16, I can attest that the first decade in the gym produced little result, and it was discouraging. If the Army didn’t force me to exercise continuously, I probably would have quit and never have realized some of my best fitness gains—many of which have only become obvious in my third decade working out.
This same integrity issue afflicts the financial services industry. What we see online and on TV is rarely indicative of reality. The amount of investor assets that some CNBC pundit manages is akin to the number of followers a fitness guru attracts. Neither metric actually measures performance. No one should confuse being good at selling with being good at investing, and yet the financial media and excellent marketing would have us think otherwise—while also hoping we forget that few of these pundits outperform a simple index fund over time.
In personal finance, as in personal fitness, there’s no legitimate way to get ahead quickly. Slow and steady hard work compound over decades. Cheating to accomplish better results won’t work. But that’s good news because, in the end, the journey itself is as rewarding as the destination—and perhaps more so.