Is the chance to spend time on a hobby leaving your finances in a hole? We look at some possible parallels between upping your game on the green versus better money matters.
This question is an easy one for the people in my life who don’t like golf to answer quickly. The average game of golf takes four hours and I can easily double that time traveling to and from the course, as well as the connected socialising. My wife has a long list of things she thinks I could get done in those eight hours.
However, I believe that there are some interesting lessons in golf that can be applied to managing your finances – a subject that the UK population on the whole finds very dull. According to the Financial Times (FT), Brits would rather vacuum or change the bed linen than review their pension.
The lack of focus is often compounded by the number of demands on our time. As such, estate or retirement planning is often at the end of a long list of other to-dos. Some demographics have it particularly tough: women with young children (again according to the FT) have less than 17 minutes of ‘me time’ a day. And yet, we always seem to manage to make some time for the things we really enjoy. So what are the lessons?
1. Bad shots happen
The first of these is that bad shots happen. Every one of us will hit a number of bad shots during a round and, while this is something we can limit with practice, the main approach should be to focus on the next shot and not let yourself be distracted. Similarly, investors cannot expect a smooth, upwards projection for their portfolio all the time. Markets go down as well as up and you may get back less than you originally invested. Again, what is key is that you avoid a rash decision that will divert you from your long-term objectives.
2. Review your routine
Another tip I have picked up is that professional players go through a routine before making a shot. This routine is designed to help them think through the shot and achieve a better performance. Investors too can develop a routine ahead of any financial plays. As such, any decisions you act on will have been properly thought through with your overall financial strategy and risk tolerances in mind. And they might lead you to work out that a stock tip shared on a green is often too good to be true.
3. Have you focused on the fundamentals?
As you become better at golf, you realise that every shot you make is down to getting the fundamentals of grip, stance and alignment right. Small issues such as too tight a grip or knees that are too straight can throw off your swing. Fundamentals play a big part in finances too.
Some of these fundamentals are ones that only professional investors may use to their advantage – such as rolling three year stock price averages – but others are easier to check off. Are you taking enough risk, for example, to achieve your financial goals over the long term? Lots of investors worry far too much about market risk and not enough about longevity risk. Once you identify any potential problem with the fundamentals, you can make any necessary adjustments and get back on course.
4. Block out distractions
Finding your own ‘zone’ can also help. When a professional golfer is playing well, they have blocked out the noise of the crowd by being in their zone. Despite the ‘quiet please’ notices, there is always going to be some noise to cause distraction. Investors also need to be able to shut out the noise of the financial news headlines, most of which are there to sell newspapers and drive advertising rather than inform decisions. It is important to focus on the substance of the fundamentals and not the noise.
5. Listen to advice
Last, but not least, even after all of their success, top professional golfers still regularly work with their coaches and listen to their guidance. And while many investors think they are at the top of their game, it is still worth a conversation with me or one of my colleagues to help them determine their strengths and weaknesses, identify long-term goals and develop a bespoke plan to help them reach their financial goals without taking too many cut shots.
These lessons may not make the grade as far as my wife is concerned, but if I can convince her the time spent on golf is helping our financial affairs too then I will hopefully be able to play a few more rounds before I have done all the DIY jobs.
Enjoyed this article?
Carlo has been with Nedbank Private Wealth since September 2010 and has almost 20 years’ experience managing the complex affairs of high net worth clients. Prior to joining us, he worked for Coutts & Co. He is a Member of the Chartered Institute for Securities & Investments and also represents Nedbank Private Wealth on the committee of the Nedbank South Africa Charity Golf Day held every year to raise money for children’s charities.