So I decided to sign up for an Ironman 70.3 Triathlon this fall. I’ll be doing (trying) a: 1.2 mile swim, 56 mile bike ride, and 13.1 mile run. I’m not really sure why I decided to sign up. I hate running. Before I started training I had never been on a road bike. I haven’t done much swimming. I guess somewhere in the back of my mind the idea of completing an Ironman appealed to me and I decided to go for it. I remember watching the Ironman World Championship race on TV when I was a kid. I even had the Ironman Timex digital watch when I was about 6. I quickly realized I was way out of my element prepping for the race. There are hundreds of online courses, training programs, books, all designed to prepare you for race day. As I researched training schedules, diets, equipment, etc., it became very obvious that I needed to break it down into bite sized chunks and focus on those first. I looked up how much time I would be spending on each section of the race and focus on the largest part first. I found this nifty chart that gives an average breakdown of each event.
The average amount of time it takes to complete a 70.3 Ironman is 6 hours. That means that I’d likely be spending nearly 3 hours on the bike. I decided to learn all I could about biking first.
Turns out, all bikes aren’t created equal. To my surprise, you don’t want to do a triathlon on a standard road bike. During a triathlon you don’t ride in a pack - which I learned is called the peloton. During the Ironman, it’s difficult to draft behind other cyclists because everyone is racing at different speeds. Because of this, they put special handlebars on the tri bikes, in order to create better aerodynamics. Using a standard road bike for a triathlon is certainly better than using a mountain bike, but if you get a triathlon bike, you’ll have a better time on the long, often lonely, biking section of the race. These small improvements make the experience of a 3 hour bike race much more enjoyable and effective. They also allow you to go faster without burning as much energy. You’re able to ride the 56 miles by yourself, in a very aerodynamic way, saving your remaining energy for the 13.1 mile run.
I also learned about Zone Training. Zone Training starts out by analyzing your resting heart rate and then your maximum heart rate. Figuring out your resting heart rate is easy. You just take it first thing in the morning before you do anything. Finding your max heart rate is a really miserable task. It involves a 15 minute light warm up, and then eventually building up to a 15 second all-out sprint that will leave you breathless and exhausted. Your heart rate reading immediately following the sprint is your max heart rate. Once you know these 2 numbers, you can figure out your training zones. There are 5 zones, pictured below.
As you can see, Zone 1 is really easy, Zones 2 and 3 get more difficult, and Zones 4 and 5 are really difficult. Zone 5 is achieved when your heart rate is between 89%+ of your max.
Here’s the main idea: if you’re riding a bike in an Ironman for 3 hours, what zone do you need to be in? The answer is likely Zone 2 and 3. It would be very difficult to be in Zone 4 for 3 hours. Moderating between Zone 2 and 3 for the race would certainly be faster than spending the entire race in Zone 1 and you would be able to actually finish the race in Zone 2 and 3, compared to gassing out after a while in Zone 4 or 5. What I’ve learned during my training for the triathlon is that I cannot expect to do the entire race in Zone 4 and I need to be going faster than Zone 1.
The purpose of training day in and day out is to increase your fitness, to optimize your effectiveness in each zone. When you first hop on the bike, do your zone training, you’ll probably be pretty slow. After hours and hours of working out, pretty soon your Zone 3 is a lot faster than it used to be. You still won’t be able to do an entire Ironman in Zone 4, but you’ll be so much faster in Zone 3 than you were before.
This morning I got up early and did a 90 minute bike workout. The entire workout was rotating between zone 2 and zone 3. I spent a total of 13:48 in Zone 2 and 1:00:02 in Zone 3. My Zone 3 has a target heart rate of 144-163 bpm. My goal is to be able to increase my endurance, stay in Zone 3 but eventually ride further and further.
Here’s an overview of my workout:
You can see that I didn’t spend much time at all in Zones 1, 4, or 5. When I first started training, I thought the idea was to be able to spend as much time in Zone 5 as possible. That isn’t the case. At all. It’s all about knowing what Zone to be in, how long to be there, and improving your performance in each zone.
During my 90 minute bike ride this morning, I realized that triathlon training is a lot like investing and financial planning. Sounds crazy, right? Hear me out…
When you buy a triathlon bike, you need it to be as aerodynamic as possible. If you buy a mountain bike, you will be able to finish the race, but it will be grueling. You’ll have spent a ton of energy on an inefficient bike when you could have been gliding your way through the course on a good bike. Each pedal stroke on a mountain bike will send your precious power into the suspension of the bike instead of straight to the road. On a tri bike you’ll feel powerful and strong, and you’ll be doing as much as you can to give yourself a competitive advantage. Each stroke of the pedal will be designed to send as much power directly to the road, hopefully propelling you forward with increasing efficiency.
It’s the same with investing. Investing vehicles are not created equally. When building retirement portfolios, most people use mutual funds or exchange traded funds (ETFs). These funds are financial vehicles that pool investor money together and the fund itself will buy a large basket of stocks and/or bonds (sometimes other investments, too). For example, if an investor wants to buy the S&P 500, they can buy all 500 companies individually or purchase shares of a fund that is designed to track the S&P 500. Placing 500 trades would be very time consuming and potentially very expensive. Buying shares of an S&P 500 fund is much easier and might be more cost effective. Here’s the catch. The fund doesn’t do all of this work for you for free. They charge fees. Funds have internal fees including: loads, expense ratios, and 12b-1 fees. Sometimes these are cheap, but sometimes they are very expensive. The most common fee that is talked about is the expense ratio. This is the fee that the fund charges each investor yearly. “The expense ratio, which is calculated annually and disclosed in the fund’s prospectus and shareholder reports, directly reduces the fund’s returns to its shareholders, and, therefore, the value of your investment.” (Source: https://www.investopedia.com/articles/personal-finance/092613/pay-attention-your-funds-expense-ratio.asp)
The average expense ratio for a stock based mutual fund is 0.63%.
If you’re building a retirement portfolio, much like triathlon training, you want your portfolio to be as aerodynamic as possible. You want to have as little drag on your investments as you possibly can. You wouldn’t spend 3+ hours racing in an Ironman on a mountain bike, you shouldn’t spend decades and decades investing in funds that are unnecessarily expensive. One of the best ways to get to the Ironman finish line faster is to have an aerodynamic bike. One of the best ways to watch your wealth build and get to your financial goals faster is to have optimized investment strategies, ditching the mountain bike for the triathlon bike. The point is to make sure that your investments are tailored and perfectly suited for your goals and situation.
The other part of training for a triathlon that’s similar to financial planning is Zone Training. Most of us are attracted to the idea of speeding along in Zone 4 or 5, hoping we can cut down the total time spent in the race. If we blasted through a 56 mile bike ride in Zone 4, it’s highly unlikely that the running portion of the race would be very successful.
First of all, in order to understand our “financial zones” we need to understand where we are right now (our resting heart rate) and our end goals (or our max heart rate). We need to know what we’re striving for, how much we want in retirement, what type of lifestyle we want to live, etc.
Then we need to know what Zone to be in, how much time to be in that Zone, and maximize our efficiency in each Zone.
The Zones of Financial Planning are as follows:
Zone 1: Spending money for an education or training in preparation for our career.
In Zone 1, it’s likely that your net worth will steadily decrease. We have to pay for school, we usually don’t have great jobs. This is the warm up for the rest of our lives. Do not feel frustrated if it seems like you aren’t going fast enough, you’re not supposed to go fast in this zone. Make sure you’re optimizing zone 1, don’t take on unnecessary debt, pick a career that you will love, be deliberate in your planning. Understand the point of being in Zone 1 and be happy you’re there. The race gets more intense from here on out.
Zone 2: Starting our career and laying the foundation for our future goals (including retirement).
At this point we have a career. We have an income. We need to start saving for a down payment on a home, we need to open investment accounts, start plugging away at our student loans. Negotiate your salary, grow your business, lay the foundation to maximize your income over the next 40 years. The important thing to know about Zone 2 is that, although you won’t be going very fast, you’re still making progress. Zone 2 is fun. Enjoy this part of the race and be proud that you’re out of Zone 1.
Zone 3: Mid-career and wealth building.
We’ve been racing for a while now. We’re steadily paying down our debt, we’re building a nice little nest egg in our retirement accounts. You’re nearly done with the student loans. In Zone 3 you can still have fun but you’re really sticking to your plan. You might even see a positive net worth. You’re starting to save up for children’s college. You’re traveling a little bit. This is fun but we really need to make progress here.
Zone 4: Debt free, focusing on assets and building wealth.
We’re getting intense now. If you have children, they’re probably in college. We are getting to the tail end of the mortgage. Our assets are sizeable and we really need to pay attention to asset allocation, risk, time horizon, etc. You won’t have much debt in zone 4 so you can really ramp up savings here, getting you closer to the finish line. Focus on your net worth. Be smart with your spending. What you’re accruing here is what will get you through retirement.
Zone 5: Sprint to financial independence.
You’re not going to be here long. Tidy up the few remaining loose ends, give it one last huge push, and cross the finish line. You’re about to enter the next stage of life: retirement.
It doesn’t matter what zone you’re in. What matters is that you understand the big picture, that you spend time equipping yourself with the best tools, and that you are constantly striving to increase your fitness level. Our job at Liftoff is to help our clients optimize their situation, set up a financial plan for their zones, and cheer them on as we watch them cross the finish line.
We can help you optimize your investment vehicles, understand your zones, and build you a tailored financial zone training plan. There’s no sense riding a mountain bike in a triathlon and there’s no need to stress about being in Zone 5 when you need to be in Zone 3.
I’ll keep you updated on my Ironman progress and will share updates with you along the way.