Your Financial Life is a Sailboat

Think of your financial life as a sailboat, bringing you from where you are now, to where you want to go in the future.

Think of the sails as higher-risk investments, as they help your boat goes fast. These may include stocks, bonds, funds, or other alternative assets.

The boat (or the hull) is akin to cash and other low-risk assets like fixed deposits. They keep you safe and stable on your journey.

When you have too much sail and too little boat, you are 'windsurfing'. If you have seen windsurfers in action, you will often see them capsizing as the winds topple them over due to their small base. Your boat may break before you reach your goal.

On the flip side, if you have too much boat and too little sail, you are not harnessing the power of the wind. Instead, you are rowing your boat by hand. You will find yourself using lots of effort to work the oars just to move the boat a little, and certainly never getting to your destination on time.

The key, therefore, is to find a good balance between sails and boat. To do so, you may consult your financial adviser for an investment risk profile analysis. It will help you determine the ideal proportion of your portfolio that you can invest in risky assets, and how much to retain in safer ones.

Notice all boats have lifebuoys? They represent your insurance cover. In the event of a capsize, the lifebuoys are there to save your life. No boats should be without them. And the number of lifebuoys you have should be in proportion to the size of your sailboat. They ensure that even when the seas and weather are not in your favour, you will be kept afloat so that you may live to fight another day.

How strong is your sailboat? Are your sails big enough to be bringing you to where you want to go?