As often as possible, I like to ride my bike to the office. I need to shed a few pounds and I find that the fresh air along the dyke clears my head and helps me both prepare for and wind down from a business day.
"Investment biking" is my term for the random financial planning thoughts that come to me along the way.
It's nowhere near as risky as investment banking!
Here are a few that I'd like to share: 1. Assuming that you only ride to and from work 10 days a month for the six warm months of the year, save $1,000 per year in gas and depreciation, and invest the savings at six per cent, you'll have an extra $83,802 in your RRSP.
Taken even further, the savings from ditching one household automobile in favour of a daily bicycle commute could comfortably fund a full retirement!
2. A bicycle helmet is a great companion to life and disability insurance. I'm an experienced cyclist, but back in 1993, I took a spill off the side of the dyke on the south end of No. 3 Road.
I don't remember a thing except the pain after I regained consciousness. I had a concussion, broken ribs, torn rotator cuff and a pleural effusion, but I was alive. My helmet died though.
3. Because of the improvement in your health, you may be able to reduce or even avoid additional health care expenses resulting from the many expensive illnesses brought on by our normally sedentary lifestyles.
Yes, I do remember my cycling accident, but I was younger and more foolish back then.
4. Property taxes, to some degree, are a great investment. Riding around Richmond's perimeter, I'm convinced that we live in one of the greatest cities in the world.
Our dyke trails, parks, community centres and rural roads are within walking distance of anywhere.
5. Getting in touch with and appreciating the simpler things in life, like cycling, often reduces our desire for the many luxuries that we think we need.
This makes saving for our deeper life goals more attainable.
6. A balanced investment portfolio has many components, like the spokes of the front wheel.
You need to diversify across many asset classes, geographies, industry sectors, size and valuation of businesses.
7. The financial planning process is like the rear wheel.
It drives the bike through a continuous cycle of discovery, strategy and implementation.
Like the spokes in your wheels, tight or loosen any one too much and the crash of a wobbly plan could be very painful!
If you happen to be cycling, walking or running on the dyke and hear my bell ring, please don't be alarmed.
I'm either warning you of my approach or I've had another investment biking idea!
The opinions expressed are those of Richard Vetter, BA, CFP, CLU, ChFC.
Vetter is a certified financial planner and owner of WealthSmart Financial Group in Richmond (www.wealthsmart.ca).
