High Performance Habits
When we think of high performance we usually think of top-tier athletes like Michael Phelps or Lionel Messi. However, the truth is that high performance is relative. We may not all win 23 gold medals or the World Cup trophy, but we can all perform best in our own personal lives. So in that spirit, in this post, I want to share with you five of my personal favorite high-performance habits. Habits I hope can help you achieve your personal and financial goals.
01 - Marginal Gains
In the fable Tortoise and the Hare, the tortoise didn’t beat the hare because it was faster, stronger, or more talented. It won because it focused on progress and gains. No matter how small or slow they were.
Money and life most often work the same way. It’s easy to believe that someone who acquired wealth or a resounding victory in a race got there through sensational exertion and activity. However, the truth is that sustaining victories tends to be the result of small, incremental advances and improvements sustained over long stretches of time.
Sir David Brailsford is probably best known for applying this concept to achieving resounding victory. If you’ve never heard of him, Sir David Brailsford is a performance coach that turned the British cycling team into an unstoppable force at the 2008 Beijing and 2012 London Olympics.
An MBA graduate and a former professional cyclist himself, he applied the theory of marginal gains to cycling. He gambled that if the team broke down everything that went into cycling, and then improved each element by 1%, they would achieve a significant aggregated increase in performance. Here are some things the British cycling team did to achieve just that.
The British cyclists raced on wheels rubbed with alcohol to enhance their grip.
They wore electrically heated overshorts to maintain the right temperature for their muscles.
They studied how surgeons wash their hands to reduce the risk of illness.
They even brought their own pillows on trips so they were more likely to sleep well.
And the result was resounding. At the 2008 Beijing Olympics, his squad won seven out of 10 gold medals available in track cycling. And they matched the achievement at the London Olympics four years later.
It’s easy to believe that in order to achieve success we should focus on big, sensational activities. Quit my job tomorrow and go 100% into day trading even though I have no track record of day trading success. Get a second mortgage on my home and invest that money into a brand new apartment complex when I’ve never done a real estate transaction before. Social media is full of these success stories where individuals bet big and won big.
However, what we should do is think small, not big. And adopt a philosophy of continuous improvement through the aggregation of marginal gains. Forget about perfection; focus on progression, and compound the improvements. Instead of quitting my job tomorrow to go all into day trading, maybe I could focus on improving my job performance incrementally to increase my income steadily. Instead of getting a second mortgage, maybe I can focus on cutting back my food budget by 10% this month so I can get a better handle on my expenses. In the long run, it will be these small marginal gains that will have a resounding impact on our finances and live overall.
02 - Systems, Not Goals
Another common belief in achieving success in our lives is those big audacious goals will lead to big audacious results. We want to get into better shape. We should set a goal to lose 20 pounds by the end of the year. Do we want to save more money? We should set a goal to save $10,000 by the end of this month. However, the truth is that, while goals do serve their purpose of giving us a sense of direction as well as motivating us, they aren’t the most effective ways to make progress.
James Clear, the author of Atomic Habits talks about in his book how in the Olympic Games, the winners and losers all share the same goal of winning the gold medal. No athlete is going to the game with the expectation that he or she will come home as a loser. However, not everyone wins the gold medal. As Michael Phelps showed time and time again, only a select few win the gold medal.
Therefore, if goals aren’t what differentiates the winners from the losers, what is? It is actually the system and process that gives us the best chance of winning in the long run. So what is the difference between systems and goals? Simply, goals are about the results you want to achieve. Systems are about the processes that lead to those results.
Let’s say you want to save $1M by the time you are 40 years old. That $1M by 40 is your goal. Now the system is your savings plan, your automated investments, and your low-cost broad market index funds. Or moving slightly away from money. Let’s say you want to achieve 10% body fat by Dec 31st of this year. The 10% by Dec 31 is your goal. Your system is your meal plan and your workout schedule. Goals are good for setting a direction, but systems are what you need to focus on in order to make real sustainable progress. The three-time Super Bowl winner Bill Walsh probably said it best
“The score takes care of itself.” - Bill Walsh
That is if you are focused on getting better each day, rather than staring at the scoreboard the whole time. And this is the primary reason why I so love simplicity and automation when it comes to my finances and my investing. I like a simple one-page budget. I automate all my investment transactions. And I like to use a very simple 2-fund / 3-fund strategy for my investment portfolio.
In the long run, what will help us achieve financial success won’t be our audacious goal to become a millionaire by the age of 30 or 40. Rather it will be our system.
03 - Art of Subtraction
When it comes to the world of personal finance and investing, there is so much information out there that it is easy to feel like we are never doing enough. I need to focus on developing my career capital so I can increase my income. Wait, I also need to set up my Roth IRA so I can save for my retirement. Hold on, what is this portfolio rebalancing? Do I need to do something with my investments? The amount of information and to-do lists are essentially endless.
That is why I personally have to tell myself to practice this art of subtraction. To ask me, what is most important? Especially right now at this stage of my life? It's not to say that rebalancing your portfolio isn’t important. However, if you are still struggling to dial in your budget, that is where your focus should be on. Not rebalancing or backdoor Roth IRA.
Oliver Sacks, an eminent neurologist, and an author were known for putting up a big yellow sign in his house with the word NO! written on it in block letters. In a memoir, he explained why he did this:
“Reminding myself to say no to invitations, so I could preserve writing time.” - Oliver Sacks
The Taoist philosopher Lao-tzu wrote that the path to wisdom involves “subtracting” all unnecessary activities:
“To attain knowledge, add things every day. To attain wisdom, subtract things every day.” - Lao-Tzu
For me, this was most relevant when it came to selecting my investment strategy. I used to believe that sophistication and complexity went hand in hand. Especially in the investing world. Smart investors know how to use different investment vehicles, with different trading platforms coupled with investing hacks to eke out the best returns possible. However, after having researched and attempted many different pathways, I’ve come to a place where simplicity trumps all.
Every time I introduced a new fund to my portfolio, I was adding another complexity to my life. And in essence, distractions that would hinder the growth of my net worth in the long run. Today I follow a very simple 2-fund / 3-fund investing strategy:
A Vanguard Total Stock Market Index Fund, also known as VTSAX represents the majority of my equities holding.
A Vanguard Total Bond Market Index Fund, also known as VBTLX represents my bond holding.
A little bit of Vanguard Total International Stock Index Fund, also known as VTIAX represents my international funds. But to be honest, not a lot to make a significant difference.
It’s definitely not the sexiest and the most sophisticated portfolio out there. But it gets the job done and that’s what matters. Be wary of complex solutions. Most often less is better. Practice the art of subtraction and pursue simplicity.
04 - Read Voraciously
As an immigrant who came to the United States at the age of 9, I would have to say the greatest life-changing habit for me was becoming a lover of books. In my youth, because my parents couldn’t afford after-school or summer school, I remember my mom would drop me off at the library whenever she could. It sort of became my home away from home and I thankfully learned to fall in love with reading and books.
And it is common knowledge that anyone who's achieved success in their lives shares this philosophy of loving to read as well. However, what is also important apart from just reading is that we want to read books and articles that expand our minds. Not just validate what we already believe or think we know. Adam Grant in the book Think Again, talks about what set great presidents apart from all other presidents.
Experts assessed American presidents on a long list of personality traits and compared them to rankings by independent historians and political scientists. And only one trait consistently predicted presidential greatness after controlling for factors like years in office, wars, and scandals. It wasn’t whether presidents were ambitious or forceful, friendly or Machiavellian; it wasn’t whether they were attractive, witty, poised, or polished.
What set great presidents apart was their intellectual curiosity and openness. They read widely and were as eager to learn about developments in biology, philosophy, architecture, and music as in domestic and foreign affairs. They were interested in hearing new views and revising their old ones. They saw many of their policies as experiments to run, not points to score. Although they might have been politicians by profession, they often solved problems like scientists.
President Abraham Lincoln is probably most famous for this trait. He not only read opposing views regularly, but after he was elected president in 1860, he appointed three individuals who actually ran against him as president onto this cabinet. Attorney General Edward Bates, Secretary of the Treasury Salmon P. Chase and Secretary of State William H. Seward. A sign of a successful individual is that he or she isn’t afraid to have their thoughts challenged. They are more focused on wanting to find the best solution, rather than being right.
We are all ignorant of something and books, especially those that challenge our current way of thinking are some of the best ways to make us wiser. So read voraciously, but also don’t just read books that support your point of view. Read those that stretch your thoughts.
05 - Reinvent Yourself
Dwayne Johnson, also known as the ‘Rock’ is one of my favorite examples of someone who mastered reinvention. Today he is one of the most bankable Hollywood stars. With movies like Black Adam, Jumanji, and Fast & Furious, the sky's the limit to how far he can go. But none of this success happened overnight. When we wind the clock back to where he started, we see that he practiced this concept of reinventing himself over and over to arrive where he is today.
Dwayne Johnson - The Master of Reinvention
Given his physique, Dwayne Johnson initially went on to play football at the University of Miami. He aspired to play professional football but went undrafted in the 1995 NFL Draft. Then he signed with a team from the Canadian Football League and was cut from the team in his first season. Instead of wallowing in pity, he decided to pivot to professional wrestling. And for 10 years he made a name for himself and won the world champion title 10 times.
And if that wasn’t enough, he decided to pivot again and go into acting. He first started out with a small role in movies like The Mummy Returns, but then eventually moved into bigger leading roles. Now I’m not saying we should all follow in Dwayne Johnson’s foot steps and try to be a Hollywood movie star. But he provides a great example of someone who wasn’t afraid to constantly reinvent himself despite how uncomfortable it was.
When he tried to reinvent himself from a failed football player to a professional wrestler, he was probably laughed at. And again when he tried to reinvent himself from a professional wrestler to a movie star, people likely didn’t take him seriously. But that didn’t stop him. He preserved and grew from the process of reinvention.
We are living at an interesting time in history where industries and careers are changing at a faster pace than we can comprehend. A thousand years ago you could have started your career as a carpenter and your son, your grandson and your great-grandson could have literally done the same thing you did because the world didn’t change too much. But today, yesterday’s industries no longer exist today. And jobs that existed when I graduated college 20 years ago, only exist in history books.
So if we want to thrive in not just today’s world, but tomorrow's, we want to adopt the mindset of constant reinvention. And this doesn’t mean we are throwing away our current identity. But rather compounding it forward towards the next new exciting chapter in our lives.
