Running & Investing : Tapering

Taper (Verb) : To become or cause to become narrower towards one end.

Tapering is one of the most crucial aspect of marathon training cycle and yet, it is the most difficult to implement process because runners fear cutting back on training.

Approaching fag end of training cycle for Tata Mumbai Marathon 2019, tapering week is just around the corner.

I remember my first taper cycle, I was a happy runner as the cycle required to cut back on mileage, rest and catch some sleep. By the time I was ready for next race I felt, tapering sounded great in theory, however in reality we runners feel a sense of discomfort during the taper period because we fret on losing our fitness and gaining weight.

However, reducing mileage is equally important for full recovery from previous workouts and deliver peak performance on race day.

That brings us to question; When does one taper while investing ?

Remember, when we started investing our thought process was based on:

  • Goal (Child education / marriage, retirement, vacation, car etc.)
  • Time horizon (1/5/8/10/20… yrs)
  • Liquidity (How soon funds are at your disposable)
  • Ability to bear volatility (We should have a sound sleep)

When nearing / approaching a goal, we need to keep in mind below factors:

  • Cash flow amount (Minimize allocation to volatile asset class, 1-2 yrs in advance)
  • Allocate funds from volatile assets to minimal volatile asset class
  • Liquidity (Start liquidating illiquid assets such as real estate)
  • Succession plan, most crucial aspect but completely ignored. (Ensure usage of funds happens the way we planned for, in case of our absence)

Unlike running, tapering period in personal finance can vary from 1 to 2 yrs based on cash flow requirement. One needs to tread with caution and keep check on emotions and focus on approaching goal.

Content – Ajit Kaushal