Colin Bloodoworth looks at the striking
similarities between weight and money

Why Diets
And Savings
Plans Often
Fail to Workieting and saving may be two
entirely different aspects of
our lives yet there aresimilar ities in the way weapproach both and the.
resulting degree of success,or lack of it, in achieving our goals.
Firstly we should consider our main
goals in dieting and saving. There may be
subsi diary goals, such as losin g or gaining
we ight for a specific event or saving for aparticular reason, such as a holiday. But
the long-term goals are likely to be permane nt weigh t loss or gain in tile case of
dieting an d finan cial ind ependence (orgettin g th eir earlier) in retirement in tilecase of savin g.

DSuccess stories
If we look at statistic s in Weste rn cou ntries, tile resul ts are not encou raging.
Many studi es have been carried out on
the success of dieting plan s and mostshow failur e rates of85 percent or higher.
If financial independence is the target
for long te rm savers the suc cess rate is notth at mu ch better. Various studies wo uld
ind icate that only a smal l percentage oftile popul ation can exp ect to achieve true
financia l independence by the age of 65.
FailurePeop le aban don their plans for a numberof reasons.A new diet may prove unpalatable, there may be unpleasant side effects
and itmaybe just too hard to give up
som e of the th ings previously enjoyed.
A com mitment to a lifetime savings
plan may prove equal ly unpalatable and it
is easy to succumb to tile temptation of
resumin g tile former lifestyle without any
sacrifices. .

Often someone or something moti vate s you at some point to make tile lifestyle change.You react by undertaking
ex treme measures such as a crash diet ordeprivation ofyour favorite foods or in

the case of savings plans you COIl-unit to acontractual investment plan at
a level that proves
un sus tainable.
In the case ofthe abandoned
diet it will serve only to incre ase
tile feeling offailure. If a contractual savings plan is aban doned or contributions reduced
tile cost in terrns of charges andpenalties can be substantial. If aclient tells me he can comfortably save a certain amount amonth I would recommend
committing no more th an athird of that am ount to a single
contractual plan.
In both cases tile temptation
is to look on ly at tile ultim ate goal wh ile
failing to take into accoun t the challenges
and pitfalls of th e journey on the way toachieving th at goal.
Proven fonnula
We can look at six princ iples that apply to a
succe ssful diet plan and then relate th em
to tile worl d of savings. .
The plan must be rea listic:Wh ere savings are concerned you don't want to radically change your lifestyle in exchan ge
for a better life 20 years down the road.
Some sacrifices will be necess ary but
there has to be a compromise.
The effects should be gr adual. Don't be
tem pted to aim for high returns an d quick
results. Plunging 100 perc ent into aggressive investments for example may hit anearly setback that could discour age youfrom main taining cour se. The planshould be reviewed periodically ratherth an daily.
You nee d a variety of nutrients. In
terms ofdieting that means a "vide rangeof foods that provide all the right vitamins. Where savings are concerned you

need an equally varied diet to inclu deassets such as cash , currencies, stocks,
bonds, property, commodities and alte rnative investments.
You need adequate calor ies. Somefoods ma y be nu tritious but unless you
consume adequate calori es you will nothave the energy to keep you active andhealthy. Similarly;cash is an essential
component of a healthy portfolio but if
you place too much emphas is on cash
holdings at the exp ense of mo re growthoriented assets your plan will lack theenergy to ensure real growth over time .
Pennanent weight loss (or gain)
To be successful a diet must maintain its
results throughout a lifetime. The
equivalent in terms of saving would betile achievement of financial independen ce, wh ich means that your weal th issufficient not only to generatesufficient income to meet all
your reasonable needs, bu t isself-sustain ing and continues
to grow without furth er
external assistance.
One final similarity
between dieting and saving isthat in both cases it would be
wis e to follow profe ssional
advice.

Colin Bloodworth.directorof
PPllndonesia,has spent morethan 20 years in Indonesia.
You can contact the writer atindonesia@ppi-advisory.com