Recently Sarah and I have decided to do some joint learning about Investment Retirement Accounts (IRAs). I got a little headache just writing that out. Adulting 101!
Anyhow, we have learned a lot to be honest, check out Amanda Holden @dumpster.doggy for a start. Her course is called “Invested Development.” She’s funny, real, and smart!
But on the topic of Strength and Fitness, some IRA-related light bulbs went off for me recently when talking with a few different clients about their goals and why are we even bothering with all of this exercise stuff?
Compound interest! You may have heard of it. It can be confusing, let me try to explain (and down a few paragraphs if you already know). Basically, the simplest way investments work is this: you put $100 of your hard earned money into a special bank account today, and then from that special account you buy a $100 worth of stock that will in 1 year on average increase 10% (or $10 real dollars) in value without you doing anything. You now have $110.
You use this additional $10 to buy more of the same stock, which you now have $110 of in total. You wait another year. You make $11 more real dollars (10% again). So now you have $121 total ($110 + $11). You do the same thing another year. You make $12 more real dollars, the total now $133. This doesn’t seem like much I know, but remember you only invested $100 at the start, the rest of it has grown on its own over 3 years time with only a few minutes of you checking things and pushing some buttons on a monthly basis.
Are you with me? The crazy thing is — and I say crazy because this is commonly difficult for the human brain to understand — if you kept this process going for 25 years, your initial $100 investment would be worth… *drum roll*… $1,083!
I know $1000 is and is also not a lot of money (in the scheme of 25 years), but the model I just outlined does scale up. If you could somehow invest $100,000 at the start, in 25 years at 10% rate it would be worth a million dollars. I’m not making this up, this is common investment stuff grounded in real data.
I know some of you are already in “the markets.” Kudos! We are just getting started ourselves, and in our experience it is a lot to take on at first. There is so much language and jargon, unfamiliar and uncomfortable territory with money. It can be intimidating. Who can you trust? It’s a lot like Weightlifting and Fitness used to be for us too.
But compound interest exists in lifting and conditioning too. It isn’t exactly the same, as unlike money which can often be “funny” — or earned without any real work being done by you — your ongoing effort and work is integral to your strength and fitness development.
It is strikingly similar though, and the payoff is more valuable: your Health. Good workouts and habits formed in your teens, 20s, 30s, 40s, and 50s *do* produce *more* favorable adaptations that last through your 60s, 70s, and beyond, as your skill and strength gains have so much time to compound. Your previous max lift with 35 lbs becomes your warm-up to 135 lbs. If you start training late in life (60+), it is much harder to make significant gains. That doesn’t mean it isn’t worth it. Far from it, it becomes even more important, but by starting early you reduce the stress of the process, you can take breaks, make mistakes, and still have plenty of time to adjust course. It’s simpler.
The reason to invest in your Strength and Fitness now are simple: build up a buffer, early. Find a coach who can teach you not just how to get strong now, but how to do it on your own indefinitely. Make it harder for Father Time to knock you down when the atrophying effect of age starts to take its toll. Do not go gentle into that good night. Be a “Badass Granny” (credit to Amanda Holden) who lives life to the fullest even when “retired.” As she points out, retirement in a nominal scenario (e.g. retire at 60-something and live to 90-something) is an entire third of your life, not some brief epilogue. Make the investments now. Stay functionally independent and free for as long as possible.
Coach Mauricio