F1 Racing and Financial Planning

I saw the new F1 movie, an incredible film that I highly recommend! This got me thinking about the similarities between F1 racing and financial planning.

Before a team puts a $150 million dollar race car on the track they hold a pre-race meeting. Drivers, race engineers, strategists, the team principal, more engineers (performance, technical) in addition to crew leads, and support staff are all present. It’s a big meeting as there’s a lot on the line.

Winning is important, in fact it’s everything in F1. This draws in more sponsors, better technology and engine packages, along with branding and visibility. It also generates more revenue for the team to distribute to various aspects of the program. More professionals with ability to make the car faster on a variety of tracks. Growth as an organization is a necessity; winning is a zero-sum game. Invest, plan, and strategize to get one of your drivers to the checkered flag first.

Most teams have two drivers working together around the track in real time. Team leaders have outlined a clear plan A, B, and C before the car arrives at the starting grid. But guess what! Like life, track conditions change, tires wear out or go flat, and weather conditions are ever evolving. Flexibility is a necessity. It’s valuable to watch your competition too, as their race strategy may often influence your next decision.

So, as you go about accumulating personal wealth, do you have a team and a plan? Are you playing multiple roles or are you collaborating with professionals? How often are you communicating and updating your plan? Is your spouse or partner taking part in planning?

The good news for investors is you don’t need several hundred million dollars a year as an F1 team does to run your plan. Investors who are serious about retiring comfortably and staying comfortably retired will want to look beyond their investment statements and create their own plan A, B, and C.

Often this begins with a partnership with a financial planner. The best planners ask engaging questions and stay curious to allow investors to figure out what they want. Time and space allow clarity to arrive. Decision fatigue is real, and more choices aren’t linked to better decisions. Navigating life with a friend helps simplify your life beyond investments.

Once you’ve created your plan, it’s only relevant for ten to twelve months. Implementation and monitoring are necessary as life rarely moves in a straight line. Keeping an open ongoing dialogue helps reduce surprises. Focusing holistically on tax, cashflow, and estate considerations make the most of variable scenario planning.

Other professionals are necessary to add depth and expertise to your team. This includes attorneys, accountants, an insurance specialist, bankers, and mortgage lenders. Each has a role to play and stories to share. It’s best not to silo these relationships; working together tends to create positive outcomes.

Unlike F1, you don’t need to be constantly checking out your competition. What your friend, neighbors, or the “Joneses” are up to is irrelevant. Money is personal, our feelings and beliefs around cash, debt, and spending are uniquely ours. There is no right or wrong approach to planning, it just needs to take place.

Winning is not important in financial planning; more is not the destination. The journey should be enjoyed along the way as your financial plan integrates spending, savings, and investing.

Living your life outside of investment statements and current market activity is truly rewarding. This creates more time for personal fun, family activities, and hanging out with friends.

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