July 22, 2015

I was lucky enough to attend two rounds of the U.S. Open, recently held at Chambers Bay. As a huge golf enthusiast, this has been a long-held dream of mine. This experience had special significance since it was held at a local course that I’ve played … and a humbling course at that. It reminded me of the many parallels between golf and financial planning.

My love for sports, golf in particular, often bleeds into financial conversations with clients. I like to use golf analogies to talk about investing and financial planning because of the perspective it can bring for the right person. A few of my favorites for you golfers out there:

  1. Should you pull the driver out and try to hit it 300 yards when you have a narrow tree lined fairway with water, bunkers and other hazards? Or should you take a long iron and try to safely hit it down the middle? This is similar to investing. Most of the time it’s better to plan and invest for reasonable risk-adjusted returns rather than stretch for lofty numbers. There are other times where the goal is far down the road or is flexible, and being more aggressive makes complete sense. The good news is there is no right or wrong approach. You can pull out the driver (all aggressive stocks) and potentially hit it a long distance, or you can hit the iron (balanced portfolio) and play it safe. What’s more important is figuring out what type of golfer — or what type of investor — you are, and that’s what we’ve gotten really good at over the years here at Mainspring.
  2. To be a good golfer you have to be level headed, committed to working hard to improve (practice), and you have to be consistent. You can’t expect that if you do not practice or play for a year that you’ll go out and shoot even par. Well, at least not me! With financial planning you need to have the same fundamentals: focus on your budget, build your savings/emergency fund, stick to a committed investment plan, and leave the emotions at the door (if possible). None of these things are easy, but we strive to keep our clients on track and help make sure they don’t get frustrated and give up on their plan (or throw their clubs in the lake) when times are tough. One of the most important things we do for clients is help them prioritize and put things in perspective. For me personally, my life has absolutely changed for the better over the last decade. I got married, had children, and grew a lot professionally, especially here at Mainspring. Unfortunately, my golf handicap is about the same. But that’s okay because my commitment has been to my family, clients and co-workers, not the driving range.
  3. Golf is not made up of just one or two impressive shots made through the round. You can’t just be a good putter, or only be able to drive the ball well, you have to have a myriad of shots (low, high, left, right, chipping, putting, driving). You also have to be creative, flexible, and play out your whole round in order to see the final score; you can’t get frustrated and quit after a bad hole or two. And the little things count. A two-foot putt counts as much on the scorecard as a 300-yard drive. Financial success and security is all about doing the simple things well, and simple is not always easy. You can’t put all of your focus on your investments and push aside things like your will/estate plan, protecting your family or tax strategies. I have a tendency to get on my soapbox about this, but it’s crucial that all areas of your financial plan are working together in concert. That’s why we always strive to be comprehensive as advisors, as much as possible.

I’d like to challenge each of you to think of your favorite activity, sports or otherwise, and draw parallels to your financial life. I find it makes it a little easier to put things in perspective by doing this, and makes it a little more fun. And if you are a golfer, the next time you’re on the tee, focus on positive thinking. Have a plan for your round and keep away from the bunkers, the water and the trees. It’s all about hitting the fairway, then the green, and two putting for par. Eagles and birdies are great but double and triple bogeys are a lot worse. When it comes to your financial picture, be optimistic, have a plan, but keep an eye out for risks. A well-rounded plan should work in all economies and market environments, as long as you build it properly.

See you on the course, or in the offce. :)

Jeremy Taylor, CFP®, ChFC®CERTIFIED FINANCIAL PLANNER