What better way to explain the intricacies of personal investing than by combining two of my passions: helping others improve their financial lives and flying aircraft? That’s right. I am an investment advisor representative, and an Airline Transport rated (ATP) instrument instructor pilot. While growing up in St. Louis, Missouri, Trans World Airlines (TWA) constantly flew over my parents’ home which inspired me to ride my bicycle to the local airport, Spirit of St. Louis (KSUS). Several years later, I became a corporate pilot for prominent business leaders who eventually inspired me to transition from the cockpit into the business world.
You might be thinking, “How can aviation have anything to do with personal finance?” Well, here you go! Here are six ways aviation and investment planning are surprisingly alike:
#1: Stall Recovery and Market Declines
Both occurrences can cause people to panic. Stalling a plane can be scary, and seeing the stock market go into a tailspin can be equally worrying. It is important during both situations to stay calm and level-headed. When a stall occurs, a pilot must remain calm, regain a safe aircraft configuration, and return to stable flight. If the market takes a turn for the worse, your goal is to stay focused on what you can control (portfolio risk level, savings vs. expenses, and your financial plan) until the markets recover.
#2: Air Traffic Control and Financial Guidance
Pilots always communicate with ATC prior to conducting takeoffs and landings, and often during the middle of a flight. Pilots communicate with ATC about conflicting traffic, terrain, weather conditions, ride quality, and occasionally even a weather balloon gone astray. ATC is there to keep all of us safe and informed! The same holds true for your relationship with a financial advisor. Your advisor is there to keep an eye on the financial environment and make sure you stay on track. As an advisor, I keep to a scheduled review process and recommend touching base when you have questions or experience an unexpected “life event.” Regular communication often helps prevent unwanted surprises.
#3: The Preflight Checklist Before Major Purchases
A thorough pilot always completes a preflight checklist prior to takeoff. Similarly, you should take a close look at your finances before making a major purchase, whether it’s a new home, car, vacation property, boat—or even a plane. Be certain your day-to-day financial needs are sorted out and will not be negatively impacted by acquiring a big-ticket item.
#4: Navigating Turbulence in Life and Investing
Turbulence is an inevitable part of flying, just as financial setbacks and life challenges are an inevitable part of life. Try not to sweat it, stick to the flight plan (your financial plan) and you will reach smoother air soon, and ultimately your destination (your financial goals).
#5: Small Trim Tab Adjustments, Big Financial Results
For those not familiar with the term, a trim tab is a small secondary control surface which is adjustable and allows a pilot to remove unwanted forces on the controls. A small adjustment to the trim tab allows an aircraft to fly with minimal human input at a given airspeed; it is almost effortless to fly a properly trimmed aircraft. A small adjustment in your savings habit can have a real impact on your financial future. Saving a little more today may not seem significant, but small, consistent adjustments can produce meaningful results over time.
#6: Lowering Risk on the Approach to Retirement
Prior to landing an aircraft, the pilot deploys wing flaps to reduce the aircraft’s stall speed. This configuration allows the aircraft to land more safely at a slower speed. The same can be said about nearing retirement. It is important to evaluate the risk/reward profile of your investment portfolio to determine if you are taking on too much risk. As retirement approaches, many investors benefit from reducing portfolio volatility and focusing on preserving the wealth they’ve spent years building.
Whether you’re climbing toward a major financial goal, riding through a period of turbulence, or beginning your descent into retirement, you don’t have to fly solo. Every successful flight begins with a destination, a thoughtful plan, and periodic course corrections along the way. Your financial journey deserves the same attention. If you’d like to review your investment strategy and ensure you’re still on course, contact your advisor here at Bend Wealth we’d be happy to help.
The information contained in this article does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Clay Trenz and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Past performance does not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions.
