Take a Swing at Investing Like a Golfer
Golfing and investing may not seem to share much common ground at first glance. But the more you think about it, a successful golfer and a successful investor share a number of traits such as patience, perseverance, attention to detail, and intellectual curiosity.
Below, we discuss a few areas investing and golf have in common—as well as a couple of tips you can use to make sure your investing game is as successful as your golf game.
One Bad Shot Can Ruin Your Game
Even if you make it to the 16th or 17th hole while staying well under par, just one triple-bogey can put you back at square one. Similarly, one bad investment can wipe out a major chunk of your balance sheet. This is one reason it’s a bad idea to invest in a single stock or asset—diversification is key.
The More Information, the Better
You wouldn’t take a swing while blindfolded—so why would you invest in assets you aren’t familiar with? The more information you can obtain about your investments, the more comfortable you’ll be in making investing decisions. Don’t invest in a new asset without first considering the potential consequences. Remember, every dollar you have invested in one asset is a dollar you can’t invest somewhere else, so choose wisely.
Consider Your Appetite for Risk
Golfing requires a number of risk-assessment decisions—to try to escape a sand trap or take a drop, or to attempt a difficult shot on the off chance you’ll make it. But if you’re consistently playing (or investing) beyond your risk tolerance, you could find yourself disappointed in the results. Instead, consider the risks you’re willing to take and make sure they’re compensated ones—that is, risks that have a reasonable chance of turning out in your favor.
Focus on the Process, Not the Outcome
Even the most experienced golfers have off days—and often, there’s not much you can do to combat them other than playing through and trying again the next round. But by sticking to a consistent process, practicing, and reevaluating when things don’t work out, golfers can increase their chances of a successful day on the links.
In the investment sphere, you can implement this strategy by focusing on the quality of the decisions you’re making, not the way one particular investment is rising or falling. You’ll also want to put measures in place to prevent you from making knee-jerk decisions, like selling an asset while it’s falling or buying into a bubble due to FOMO (Fear of Missing Out.)
While outcomes are important, in a diversified portfolio, the rise or fall of an individual investment shouldn’t be more than a blip on your radar. Because individual investments can be fickle, especially when chosen seemingly at random, creating an investing system and sticking to it can increase your likelihood of positive future outcomes.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
This article was prepared by WriterAccess.
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