Roger Nusbaum Blog | Success Is Driven From Behaviors | Talkmarkets
Investment Consultant

Roger Nusbaum brings 30 years of investment industry experience into his newest role as ETF Strategist at AdvisorShares.

For many years the Random Roger blog has focused on portfolio construction, behavioral finance, the need for innovative retirement solutions and ETF thought ... more

Success Is Driven From Behaviors

Date: Tuesday, January 29, 2019 6:24 PM EDT

Inputs are a greater determinant than outputs.

I saw an ad on my Facebook feed looking to sell me life insurance. It asked whether you could do any two of the following eight things and if you could then it was implied that insurance would be cheaper for you. The eight things;

Run a 9 minute mile?
25+ consecutive push-ups?
Stand on one foot for 20+ seconds with eyes closed?
Deadlift your bodyweight?
30+ consecutive sit-ups?
Touch your toes in a sit-and-reach test?
Cycle 50+ miles a week?
Exercise 2.5+ hours a week?

It's human nature to go through and see how many you might be able to do but there was one striking thing that jumped out right away. Six of the eight are result oriented, you can run a nine minute mile or you can't. You might not have control over that time, no matter how often you run. The last two items on the list are not about outputs (25 push-ups), they are about input. Cycling 50 miles a week might take you three hours or it might take you ten but you could decide how far to ride and then do it. Likewise exercising 2.5 hours, you need to find the time of course but if exercise is a high enough priority then you're likely to find the time, you are controlling both inputs.

If you exercise effectively in your 2.5 hours then chances are some of the other things on the list will become attainable if they're not already. The insurance company presumes that getting to the point of doing some of these physical challenges makes you less likely to die and I would throw in, likely to spend less overall on healthcare costs.

So it is with saving and investing. A key point I've been making for more than a decade (no claim of originality) is that savings rate and lifestyle choices (living below your means) matter more than investment performance. Blogger Nick Maggiulli put his spin on the point citing data from American Society of Pension Professionals and Actuaries who said that 74% of retirement success was attributable to savings rates. Part of the dynamic that supports this is the extent to which investment returns are out of our control.

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