It’s Super Bowl time again. And whether you’re a sports fan or not, you can probably learn something from the Super Bowl teams that you can apply to other endeavors — such as investing.
What might these lessons be? Take a look:
• Pick players carefully. Super Bowl teams don’t usually get there out of luck; they’ve made it in part because they have carefully chosen their players. And to potentially achieve success as an investor, you, too, need carefully chosen “players” — investments that are chosen for your individual situation.
• Choose a diversified mix of players. Not only do Super Bowl teams have good players, but they have good ones at many different positions — and these players tend to play well together. As an investor, you should own a variety of investments with different capabilities — such as stocks for growth and bonds for income — and your various investments should complement, rather than duplicate, one another. Strive to build a diversified portfolio containing investments appropriate for your situation, such as stocks, bonds, government securities, certificates of deposit (CDs) and other vehicles. Diversifying your holdings may help reduce the effects of market volatility. (Keep in mind, though, that diversification, by itself, can’t guarantee a profit or protect against loss.)
• Follow a “game plan.” Super Bowl teams are skilled at creating game plans designed to maximize their own strengths and exploit their opponents’ weaknesses. When you invest, you also can benefit from a game plan — a strategy to help you work toward your goals. This strategy may incorporate several elements, such as taking full advantage of your Individual Retirement Account (IRA) and your 401(k) or other employer-sponsored retirement plan, pursuing new investment opportunities as they arise and reviewing your portfolio regularly to make sure it’s still appropriate for your needs.
• Stay dedicated to your goals. Virtually all Super Bowl teams have had to overcome obstacles, such as injuries, bad weather and a tough schedule. But through persistence and a constant devotion to their ultimate goal, they persevere. As an investor, you’ll face some challenges, too, such as political and economic turmoil that can upset the financial markets. But if you own a diversified mix of quality investments and follow a long-term strategy that’s tailored to your objectives, time horizon and risk tolerance, you can keep moving forward, despite the “bumps in the road” that all investors face.
• Get good coaching. Super Bowl teams typically are well-coached, with disciplined head coaches and innovative offensive and defensive coordinators. When you’re trying to achieve many financial goals — such as a comfortable retirement, control over your investment taxes and a legacy to leave to your family — you, too, can benefit from strong “coaching.” As your “head coach,” you might choose a financial professional — someone who can help you identify your goals and recommend an appropriate investment strategy to help you work toward them. And your financial professional can coordinate activities with your other “coaches,” such as your tax and legal advisors.
Unless you’re a professional football player, you won’t ever experience what it’s like to play in the Super Bowl. However, achieving your financial goals can be a fairly big event in your life — and to help work toward that point, you can take a few tips from the teams that have made it to the Big Game.
This article was written by Edward Jones for use by Evans, who is the company's financial advisor in Richmond Hill.