Four ways investing is just like a game of football
Written by Alex de Wit on July 13, 2018.
As World Cup madness reaches a crescendo with the final just round the corner, it got me thinking about how investing is a bit like a game of football. Here’s how:
1. In it for the long haul
Conceding a goal in the first few minutes of a 90 minute football game doesn’t mean that all is lost as long as a team stay focussed and keep giving it their all for the rest of the match. Conversely, teams can be in the lead for much of the game and throw it away at the end. England almost did this against Columbia, leading 1-0 until the dying moments of the match when the South Americans sneaked an equaliser and took it to extra time and that heart-stopping penalty shoot-out!
Wealth creation is also all about a long term horizon. Although it involves a timeframe of years instead of minutes, the principles are largely the same – consistent effort by saving regularly and staying focussed on your investment goals. Statistics show that even though over a long period the market will experience peaks and troughs, a ‘buy and hold’ investment strategy works consistently given enough time.
2. Research key to winning
You can bet your life French coach Didiers Deschamps, who has led les bleus all the way to the finals, didn’t just rock up in Russia crossing his fingers for victory. Years of preparation will have preceded the tournament, not only honing the skills of his own players but also researching those of the competition to understand their strengths and weaknesses and how he could best prepare his own team to react to them.
Research is also key to successful investment which is why I’m delighted that Infinity has a unique partnership in Asia with award-winning investment manager Tilney. It means that my clients’ investments are managed by a company whose decisions are underpinned by the most rigorous research in the business. A hugely experienced team of 14 research analysts at Tilney use quantitative, qualitative and statistical research to make key decisions regarding the makeup of portfolios as well as rating funds and fund manager. Your savings really couldn’t be in better hands.
3. It is important to manage risk
As France battled Belgium in the World Cup semi-final you could see risk management in action. As soon as Umtiti had headed a corner into the back of the net to take the lead France threw all their effort into defending to shut down the risk of Belgium equalising and hold on to their lead until the final whistle. And it worked, earning them a well-deserved place in the final.
Risk is ever present in investment but it can be managed. It is central to the construction of portfolios that the lowest possible risk is taken for the desired investment outcome and Tilney achieve this by constantly monitoring risk to ensure that the level taken is appropriate and remains consistent, however volatile markets may become. Over many years, the company has developed its own proprietary systems to assess volatility and monitor the risk associated with client portfolios. I take the time to ascertain the level of risk that each of my clients is comfortable with and then they can select a portfolio which suits ranging from defensive for the risk averse to aggressive growth for those who can tolerate it.
4. Diversification is essential
Harry Kane is a wonderful striker and his performance has been key to England’s World Cup success but a team made up of Harry Kanes would not have got past the first round. A world-beating team needs a diverse set of players including a solid defence, hard-working midfielders and a safe pair of hands in goal.
Investing is just the same. If you have all your retirement savings piled into one single stock which tanks just as you about to retire you can kiss goodbye to those golden years of comfort. Diversifying your investments across different asset classes, countries and sectors of activity will help to protect your savings by spreading risk. It’s all about balance.
We all want a winning retirement but it doesn’t happen just like that. Follow these golden rules and you’ll be well on your way to achieving it. If you feel that you need a coach to help you along the way, why not let me be the Gareth Southgate to your Harry Kane? Get in touch with me at firstname.lastname@example.org if you’d like an initial chat.