In Part 1 of this post, we shared the first four of the eight steps needed to ascend your financial peak.

1. Prepare Your Mind for the Journey Ahead
2. Choose Allies for Your Financial Journey
3. Make a Plan
4. Execute the Plan and Adjust as Necessary

Let’s take a look at the final steps you should take to reach your goals in Part 2 of this post.

5. Invest in Yourself
Hillary began his long affair with mountaineering when he summited his first mountain when he was only 20 years old. His commitment to mountaineering spanned many years and was a substantial investment in himself. It also didn’t end with Everest. He also took part in expeditions to the North and South Poles. His goals were part of a larger passion and commitment. You too should seek out ways to you can make a commitment to yourself and your financial success.

Most of these steps focus on saving and financial planning but choosing to invest in yourself can provide many direct and indirect financial benefits. Here are a few ideas that you can consider and perhaps even incorporate into your plan.

• Hire a trainer and/or a nutritionist: Healthy eating and exercise can dramatically reduce stress, improve your overall health and possibly lessen healthcare costs later in life. Furthermore, lower stress levels may mean you are less likely to make emotionally driven investment decisions that could negatively impact your financial goals.
• Start a new hobby: Many of us spend nearly all of our time engaged in fulfilling our responsibilities to other people, our families and our employers. We rarely have any time for ourselves. A hobby is another great way to lessen stress and for some people it can even turn into an alternative source of income, which you could direct toward retirement savings or employ during retirement years. No matter what, flexing your creative muscles can have a profound impact on many parts of your life.
• Learn a new skill or credential: This can be as complicated as going back to school for a new degree or as simple as watching some YouTube videos to improve your Excel skills. Take a look at how you could turn this investment into a promotion or maybe get a higher paying job.

6. Use All the Tools at Your Disposal
The expedition to Everest was part of a British government project and would have been hard to achieve if not for the support of the government. Believe it or not the government wants to help you retire and you have been given a powerful tool in the oddly-named 401(k) plan.

Many employers sponsor a 401(k) plan, which is a type of retirement savings or defined contribution plan. A 401(k) plan allows for tax-deferred earnings. Therefore, your contributions are made before income tax is taken out of your paycheck so you won’t pay tax on this money or the investment gains until you withdraw it. This allows your money to work for you and will likely reduce your overall tax burden. Additionally, some employers match a certain percentage of any contributions made to the 401(k), which is also tax free until you withdraw the money. For example, some employers might match the first 50% of the first 6% of your salary that you save. Basically, it’s free money. So take advantage of this valuable tool and the maximum match right away.

7. Understand and Manage Risks
Hillary and Norgay were nearly upstaged by the first assault on the summit led by Tom Bourdillon and Charles Evans. However, during their attempt Evans’ breathing equipment failed and they had to return to camp. Clearly Evans weighed the risk of losing his life against the reward of being the first person to summit the mountain and chose to live. This is a somewhat dramatic illustration of managing risk, but hopefully it puts things into perspective.

There are no guarantees in life and this is the first thing you need to understand about planning for your financial future. Your financial plan is really built off of probable success. The actual outcomes can vary widely. Therefore, you must occasionally (at least annually) revisit the plan in terms of the possible outcomes and performance of your investments. First off, if you haven’t lived up to the commitments or targets outlined in your plan (i.e., you haven’t saved enough or overspent) then this is the first thing that needs adjusting. You will be astonished at the impact that missing a year of contributions will have on your goals and the likelihood of you achieving them. The same is true if you saved more than anticipated. In either case, evaluate whether your goals are too aggressive or not aggressive enough.

However, if you meet all of your commitments, then it’s a good time to evaluate your rate of return and the investments you hold. Let’s say you are trying to achieve an 8% return and this year you were blessed with a 20% return. This could actually mean that your investments are too aggressive for your objective and you can take this gift and just rotate it all into cash as an emergency fund for those years when you are under your planned rate. On the other hand, if you are way under target then maybe you are being too conservative. In this case, if you are reluctant to increase your exposure to more volatile assets like stocks, then consider compensating by increasing your rate of savings and accepting a lower rate of return.

8. Go Active, Go Passive or Both!
When selecting the tools or investments to help you achieve your financial goals you may stumble across a fierce debate that has raged for years in the mutual fund industry. This debate focuses on whether or not passive investments (like index mutual funds) or active investments (funds managed with the goal of outperforming a broad market index) are better for investors. I would be cautious of hard opinions on this subject because those opinions are likely born from personal, biased beliefs. Maybe that person is an active fund manager and has witnessed the success of an active fund or maybe he or she is an active exchange-traded fund trader and needs to achieve index-like returns. The reality is that neither side of this debate actually addresses the core problem.

Since 1994, an organization called DALBAR has been conducting a study called the Quantitative Analysis of Investor Behavior, which compares realized investor returns relative to those of the broad markets. DALBAR puts out an annual report on the results of their analysis and it is a good read, but it basically shows that the average stock fund investor has underperformed the S&P 500 by more than 4% a year over the past 20 years. Bond investors have done even worse, underperforming the Barclays U.S. Aggregate Bond Index by more than 5% a year. Some of the underperformance can be attributed to fund fees and fund performance, but the majority is due to investor market timing. Morningstar has similar data that compares realized investor returns to realized fund performance, which controls fees and manager performance, and it too shows a very similar result. This data makes a strong statement; it isn’t the market, our allocation or even the funds we pick that ruin our investment outcomes, but rather our own decisions.

So as a savvy investor, what can you do to be a better investor?

The fact is that the manner of investing needs to be tailored to your needs and desires. For example, if investors really believe in the growth of technology, they should probably have some investment in technology stocks and the investment plan should be tailored to the desire. If a plan doesn’t fit you, your beliefs or your goals, then you will likely abandon that plan and with it any progress toward your financial goals.

Personally, I think it can help to look at your financial goals through the metaphor of the Everest expedition. Our friends and advisors are there to help with the supplies and give advice. Our investments serve as the equipment we use to carry us to our goals. But ultimately, it is our own body, spirit and mind that determine whether we can reach the peak of our financial goals.