Greensboro, NC -- With the Wyndham in town, golf is top of mind. Financial planner Matt Logan of Matt Logan, Inc. shared his connections between golf and financial planning.
"People who have seen me play golf and know how bad I am may get a kick out of this, but golf is actually a lot like financial planning."
1- Building a sound, diversified financial plan: Each club is used differently depending on the situation, just like the investment tools that you use to build your plan. A putter may be more like a CD where there is a lot less risk of hitting it. A driver may be compared to a long term growth fund. While each of these clubs serve their purpose, you would not think of going out and playing with just one club. All of the clubs work to build a well rounded golf game just like different investments help build a sound financial plan that is properly diversified
2- Not taking excessive risks: Many times golfers, me included, will make an error and hit the ball to a bad location. Immediately, your instinct is to want to make up for this errant shot by trying to take a chance on the next shot. Most times this ends up getting the golfer an even worse situation. This is a lot like investing. Stay the steady course and do not take a lot of risk to try to make up for a bad investment.
3- Thinking long term: Golf is a long game and winning is not about getting a hole in one every time. The Masters has been played since 1934 and there have only been 23 holes in one. Not one of the golfers who had a hole in one went on to win the tournament. Only those golfers who played consistently well won the Masters. While you may have successes in your investments, being steady over the long haul wins out.
4- Beware of friendly advice: Advice from a friend or golfing partner can sometimes really hurt your game. A friend may be just trying to help by telling you to change your stance or your swing but that may really hurt your overall game. The good coaching that they have received for their swing may not work for yours. This is a lot like stock tips from friends. They may mean no harm in telling you about their latest hot stock in their portfolio, but that stock may not fit into your overall plan and risk tolerance.
5- Don't be an emotional investor: When someone loses their temper on the golf course, and starts playing with emotion instead of intellect it tends to be a downward spiral and the outcome is rarely what they had intended which generally leads to a bad score. Don't let your emotions get the best of you which could perpetuate over confidence or just the opposite, extreme apprehension. Make sure that your portfolio fits your needs for the long term and do not make short term, rash decisions that can really hurt your financial plan.
6- Hiring a professional: The best players in the world use coaches and caddies. Even Tiger Woods has a caddie and a coach. He pays his caddie 10% to help him make good decisions on the course. Use a professional to help you in your financial planning and assist you with the tough decisions.