Many amateur duffers watch tournaments to pick up tips from pro golfers on how they might improve their swing, go the distance on the fairway, or handle a difficult putt. In fact, golf and its best practitioners have a lot more to offer in terms of discipline and lessons learned, especially when it comes to helping investors stay the financial course.
Lessons from the golf course can help inform investors’ long game.
When you watch golf, you’ll notice that every single player goes through a routine before making a shot. This routine is critical to sustained performance.
Investors can also create a routine that drives action. That routine should include specific steps, such as defining your overall financial strategy, measuring risk tolerance, knowing your time horizon and aggressively saving. Find moves you can make on auto-pilot, such as regularly putting money into a 401(k).
Focus on the Fundamentals
Every pro golfer can strip down each shot to the fundamentals—grip, stance and alignment. If shots are starting to go off-line, many times the problem can be attributed to one of those fundamentals being off —small issues such as a grip that’s too tight, or knees that are too straight can be enough to throw off an entire swing. The same goes with investors who find they are off-track with financial goals. Often the issue is a small tweak to their financial situation. Is spending outstripping saving? Does your asset allocation need to be adjusted so you can take on more or less risk? Once you identify the problem, you can make the necessary adjustments to get back on course.
Seek Good Advice
Even with all their success, top pro golfers still work regularly with a swing coach and adhere to their guidance. Similarly, even investors who think they are on top of game may want to find reliable Financial Advisors who can help them assess their strengths and weaknesses, identify long-term goals and design a plan to help them reach their goals. Top players wouldn’t tinker with their own swings, and high-net-worth individuals might not want to try to manage their own money.
Your Swing is Your Own
Each professional golfer has a unique swing that works best for their game. Still, many amateur golfers look to emulate those swings when they hit the links on the weekend, rather than developing their own. The same is often true for investors. Resist the temptation to make sweeping changes in your own portfolio when a friend brags of better returns. Instead, clients should stick to the financial strategy created for their own situation to help find investment success. In both golf and investing, persistence and consistency will reward you.
Be in the Zone
When a golfer is playing well, they don’t hear the noise of the crowd—they call that being in the zone. Investors also need to tune out noise, which can include market swings, following financial news anxiously and chasing stock tips. Focus on the substance and not the noise.
Experienced golfers know that they will hit a certain number of bad shots per round. The goal shouldn’t be to avoid making any bad shots, but to develop and maintain the emotional equilibrium to focus on the next shot, and the one after that, so that you ultimately stay on track.
Investors working toward a financial goal can’t and shouldn’t expect a constant upward trend. Market volatility and down cycles are bound to happen. It’s not going to be smooth all the time. The key is to not make a rash decision that upends all of your progress.