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Golf & Your Investment Plan—Both Take Commitment

If you’re a golfer or ever tried the game, you know it’s not the easiest sport. What’s required to be a successful golfer is similar to what’s needed to be a successful investor—the right plan and the discipline to stick to it.

07/03/2024

Key Takeaways

Like golf, investing can seem challenging and maybe even intimidating when starting. But that’s not where the similarities end.

Investing and golf require mental skills and the ability to overcome obstacles—known and unknown, including the environment.

Having a plan and sticking to it are helpful ways for golfers and investors to potentially reach their goals—a successful game and a successful future.

Golf (and Investing) Can Seem Hard—Why?

If you’ve ever taken up a club and a ball, you know golf is not an effortless sport—even though it can look that way from the outside. That’s because golf is not only a mental game but also comes with unpredictable obstacles. The same things that can make a golf game successful can also be used as strategies for more successful investing.

It's a Mental Game

Mental skills, such as visualization, concentration and confidence, are needed for golf.1 These skills are also necessary when investing for an important goal, like a child’s education or a secure retirement. Let’s break down each of these skills as they apply to investing.

1. Visualize Your Game

For investing, visualization is about setting goals. However, it’s not just about “what” you want to accomplish. It’s also about how you will get there—the investment plan.

I tell my clients that a goal without a plan is just a wish. And the sooner you have a plan behind the goal, the better. That’s true even if you’re investing for something down the road, like retirement. Visualizing the future you want is an important step that many individuals easily overlook.

2. Concentrate on Your Goal

For investing, concentration means staying focused on your goals—even long-term ones. Yes, there may be times when you get frustrated as an investor. Maybe the markets aren’t going your way, or they are so volatile that you are tempted to sit on the sidelines.

But consider this: Choosing to exit the market could also cause you to struggle later, especially if you miss opportunities you may have gained by staying the course.

To concentrate on your goal, you could consider automatic investing, which can help you stay disciplined and eliminate the guesswork of when to invest.

3. Be a Confident Investor

A final aspect of the “mental game” for golf and investing is confidence. Investors can gain confidence in different ways, including having an investment plan that fits them and their goals and asking for help from a professional.

In my experience, clients with a plan are the most confident investors. Those without a plan have a more challenging time sticking to their investment strategy.

Investors can feel more prepared when they have conceptualized their goals and know their investments were intentionally selected to help achieve them. That’s where a financial professional can help, too.

When the markets get tough, it’s good to remember your goals and how your investment plan was designed to meet them. If you still feel uncertain, you and your advisor can discuss your plan and make changes if necessary.

The Environmental Game

Two environmental factors impact every golf game: the course design and weather conditions. Unlike other sports, each course can have a different layout and be affected by various outdoor conditions.

The same can be true for investing. The investing landscape can determine if a particular investment performs better or worse. And unexpected events can make the markets become more volatile. Like golf, choosing the right strategy—such as when and how to play the long or short game—is critical to developing an investment plan for all your goals.

In golf, not every shot will be the same, and not every day will be 70 degrees and sunny. So, you plan and think about your shots. The same can be true for your investment plan.

Manage the Greens and Your Portfolio the Same Way

It might help to think about managing the greens and your portfolio similarly—in segments. For example, if we’re looking at 18 holes, the first six are crucial for the long game. It’s when you get your stride and learn the course. You could view investing this way before age 37.

Your momentum kicks in during the next segment (holes 7 to 12 or ages 37 to 52). For investing, you’re likely making a better salary and could potentially invest a more significant percentage of it for the future. And if the investing environment changes, or there’s a big dip, there’s likely still time to recover losses.

You want to ensure you’re at the right stride in the last six holes. At this point (around age 53), you wouldn’t want to do anything too risky and compromise your game. Investors may want to check in on their strategies and portfolio risk levels to make sure they have the right ones in place as they near retirement, no matter the investing environment.

Investing Takes Perseverance With Your Plan

Like golf, it’s rare to see instant success with investing. But with your money, betting on overnight success might come with the risk of overnight losses. Few of us want that kind of roller coaster ride with our finances.

The alternative? Keep your long-term goals in view—always. Sure, there will be hazards and outside forces along the way. In golf, they're sand traps and wind. Investing involves volatility and economic events (think pandemic, new government policies, etc.), but a key is having a long-term disciplined investment approach, regardless of what the markets do.

That approach has been attributed to the success of the best investors throughout history. They may have invested with different strategies, but all practiced disciplined investing.2

An Investing Plan Helps Manage the Obstacles

The good news about golf is that you can decide how you will manage your game and the environment by choosing the right club and how you will play the hole. Wood or iron choices will depend on your swing and the conditions that day. Investing is the same. A mix of different investments can help guide your portfolio through changing market conditions to your end goal.

Managing investment obstacles may also depend on whether you have the right amount of risk in your portfolio. The right mix of investments and the right amount of risk may help you stick to your investing plan better because both elements fit you personally.

Too much risk and the wrong strategies (for you) can have the opposite effect and prompt hasty investing decisions that may not be best for you in the long run. That’s why periodic investment plan reviews are so critical. They can help you gauge whether your investments are risky and whether the strategies still fit your goals.

Call On a Coach

When a golfer's game isn’t developing, or they need to figure out which strategy will work best, they often call on a professional for help. As an amateur, you may not need coaching every day, but having your swing recorded and evaluated by a professional may improve your game.

Coaching from a financial professional is also smart for investing. In golf, your final score depends on how you perform on the green. Likewise, checking in as you get closer to scoring your goals—like retirement—may be even more critical.

The benefits of working with an advisor are that you have someone to bounce off ideas off of and confirm (or not) an investment decision you’re about to make. There can be many holes in people’s financial plans, so you’ll want your advisor to address the whole picture. However, you won’t want just any advisor helping with these critical matters.

It’s essential to find a coach who will listen and care about your situation—and not just about you but also about your family. Look for an advisor who listens practically in times of stress and can help you consider things you may not have considered before.

Need to Check Your Investment Plan?

We offer advice and guidance services to fit your needs. No matter how near or far you are from the green (your goal), you can choose which option is right for you and where you are now with your investment goals.

Authors
Financial Consultant Eric Martinez, CFP®, CRPC®
Eric Martinez, CFP®, CRPC®

Financial Consultant

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1

"Why Is Golf So Hard?” Stitchgolf.com, August 2023.

2

”The World’s 11 Greatest Investors,” Investopedia, April 2024.

The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

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