Discover why you should change the way you view health and wealth.
Managing your health and wealth may sound initially like very different topics but in fact they both address the same fundamental problem: balancing short and long-term benefits and minimizing risk.
From a neurobiological or conceptual perspective, there is nothing extraordinarily special about money. In fact, for most of our evolution, money was not even available. Consequently, the brain circuits that process monetary outcomes are shared with other types of stimuli, suffer from the same types of biases (more on that in an upcoming blog), and often benefit from the same types of solutions. This is also true from a quantitative or mathematical perspective where solutions such as diversification can be formally calculated and provide better outcomes in most long-term planning domains.
The financial industry has long developed structured tools to quantify and manage this challenge and the health management industry is now picking up on those strategies. Here is what you need to know and how you can use it.
Diversification: Balancing Your Portfolio of Health
In investment management, diversification involves spreading investments across various asset classes—such as stocks, bonds, and real estate. A diversified portfolio reduces the impact of poor performance in any one area, providing a more stable and reliable growth trajectory over time.
Similarly, when it comes to health, diversification means maintaining a balance across different aspects of well-being. For example, it is very common even for individuals who are in great shape to focus on one specific type of exercise they like (for instance swimming or cycling) while neglecting other types (e.g. strength or resistance training). This is the equivalent of investing all your money in real estate; it’s a core component of a healthy portfolio but on its own is very risky and not likely to yield the best returns. In the example above if you focus on swimming but neglect strength training you may have a decent aerobic capacity in old age but may lack the strength to stand up from the toilet on your own.
This doesn’t mean that you cannot personalize your health portfolio to have a stronger emphasis on things you like or find easier to do. Just like with investment portfolios, it is important to take into account personal preferences and circumstances. For example, many financial portfolios cannot be fully diversified (e.g. founders that have much of their assets in company stocks), and this can be accounted for. Similarly, individuals who have a hard time maintaining a balanced diet can compensate by a stronger focus on exercise and good sleep. Just as a diversified investment portfolio provides a buffer against market volatility, a diversified health portfolio ensures that you are better equipped to handle the myriad of life’s challenges.
Compounding and Debt Accumulation
One of the most powerful concepts in investment management is the compounding effect, which involves earning returns on both your original investment and on returns you received previously. The earlier you start investing, the more time your money has to grow through compounding, which is why long-term, consistent investment strategies are often the most successful.
The same principle applies to health management. Small, consistent actions taken today can lead to significant health benefits over time. For example, incorporating daily exercise into your routine today, even in small amounts, can be more beneficial to you than making a huge investment later on when things have already deteriorated, or when you only leave a short time for that investment to bear fruits.
A related relevant concept is that of health debt. Imagine you take out a mortgage loan to buy a house, which then requires you to pay back 1000$ a month. If you have that money, it is not a problem. However, if you continue to take out more and more debt it will accumulate until one day it will be too high for you to cover. Health debt works similarly; when you do something bad for your health (for example smoke a cigarette or eat fast food) you can think of it as accumulating a small debt that will need to be repaid at an older age. It is important to manage your debt and not let it accumulate in specific periods to then become unmanageable in the future.
As the old adage goes: the best time to make a change is yesterday and the second best is today. Remember, it is never too late to start, and small actions now can have a compounding effect later.
Personalized Risk Management
In finance, risk management involves identifying, assessing, and prioritizing, as early as possible, the set of risks that come with the specific individual's circumstance (across a wide range of personal and familial financial aspects). Similarly, in health management, risk mitigation involves taking proactive steps to reduce the chances of developing chronic illnesses or health complications specifically for that individual across a wide range of health aspects from genetic predispositions to lifestyle factors. Personalized medicine approaches are gaining incredible popularity and strong scientific evidence but unfortunately have not yet reached the average family doctor practice.
Regular Monitoring and Rebalancing
Financial managers regularly monitor and rebalance their portfolios to ensure they are aligned with their financial goals. This might involve selling assets that have been appreciated and buying others that have underperformed to maintain the desired asset allocation. Similarly, maintaining good health requires regular monitoring and "rebalancing" (such as adjusting diet or exercise routines) to focus on aspects that happen to deprecate over the last period. For example, if recently you experienced a period of prolonged stress and accumulated debt in that respect you could take time to relax rather than exercise in the upcoming week (if you have not been accumulating debt there as well of course)
Emergency Fund
An emergency fund is a financial safety net that provides liquidity in case of unexpected expenses or income loss. In health, an "emergency fund" might be likened to building resilience—both physical and mental—to handle unexpected health crises. Regular exercise, a strong immune system, and mental fortitude can serve as this reserve, helping one bounce back more quickly from illness or injury, much like an emergency fund helps one recover from financial setbacks.
Conclusion
Health and financial management both try to achieve a similar goal: namely to provide a personalized long-term plan that can be followed and leads to the highest return with the lowest risk. Financial managers have spent decades considering how to operationalize this quantitatively and systematically and the knowledge they have accumulated is now serving to enhance other fields such as health management.
At Holistify, we specialize in integrating health and wealth strategies, helping you optimize for the best returns and tradeoffs in both areas with personalized, data-driven insights. Contact us to explore how we can help you align your health and wealth management goals.
Additional reading
Attia, P., & Gifford, B. Outlive: The science and art of longevity. Harmony Books.
Blair, S. N., Cheng, Y., & Holder, J. S. Is physical activity or physical fitness more important in defining health benefits?. Medicine & Science in Sports & Exercise, 33(6), S379-S399.
Glimcher, P. W., & Fehr, E. Neuroeconomics: Decision making and the brain. Academic Press.
Kivimäki, M., Nyberg, S. T., & Batty, G. D. Long-term risk of cardiovascular disease in relation to frequency and duration of physical activity: A systematic review and meta-analysis of prospective cohort studies. Lancet, 388(10051), 1269-1276.
Lechner, M. Long-run labour market and health effects of individual sports activities. Journal of Health Economics, 28(4), 839-854.
Markowitz, H. Portfolio selection. The Journal of Finance, 7(1), 77-91.
Samuelson, P. A. An exact consumption-loan model of interest with or without the social contrivance of money. Journal of Political Economy, 66(6), 467-482.