Five financial lessons football can teach us
Anyone who has been in my office has seen my Edmonton Eskimos wall of honour. I have photos, jerseys, helmets and other memorabilia.
Football is wonderful. It’s two armies going to battle and there is so much to see and to know. I love the complexity and the strategy.
You can apply some lessons from football to your financial and investment planning. These things should make you more financially successful.
1. Teamwork is important You can have the best quarterback but you’ll lose without the supporting cast. He needs blockers to give him time to get passes off to those fleet receivers, or he’ll be picking himself off the turf a lot after getting crushed by a blitzing linebacker.
It’s the same with investing. Think of those high-flying funds or stocks as the star quarterbacks and receivers. They make the big plays that get the fans out of their seats but you need balance, too. A portfolio also needs balance or you’ll fail. That requires a mix of sectors, regional asset allocation, company sizes and so on.
2. Defence wins championships This applies in football and in financial planning. Offence is important, but the successful teams have a tough defence that’s able to stop the other team, protect leads and get the ball back to the offence.
A good financial plan is built on a defence-first attitude. One of the first things you need to do is build a moat around yourself and your family with good insurance. You need life and disability insurance, a health and dental plan and an emergency fund or plan.
Even a high net worth can be crushed by a death or disability. Insurance protects you from life’s offensive attacks.
3. Trust your coaches Coaches create the game plans that are necessary for success. I like to position myself as my clients’ money coach. I help them identify their life and financial goals, create written, goal-oriented financial plans (their game plan) to get them where they need to be, build solid investment portfolios and help them make good decisions when markets aren’t co-operating.
When my clients save for their first house, find a mortgage broker, arrange life and disability insurance, set up lines of credit for emergencies, save for retirement or for the education of their children, plan their estate or any of myriad other things, I’m there to coach them. Just as most football coaches have played, I’ve been there and have done all that.
4. Game won’t always go as planned It was November 1981 and one of my favourite Grey Cup games. My Eskimos had only lost one game that season and were 22.5-point favourites over the five-win Ottawa Rough Riders. It should have been a blowout.
The Riders led 20-1 at half-time. However, the Esks refocused in the dressing room and roared back to fashion a 26-23 win on a field goal with three seconds left. They also won the title the next season — their fifth of a five-in-a-row dynasty, unheard of in North American pro sports.
In investing as in football, you need to keep focused on the end goal. Don’t let market ups and downs, the economy or politics distract you or cause you to abandon your game plan. Build an appropriate portfolio for your goals and personal situation and stick with it.
If your risk-tolerance level and goals call for a balanced portfolio with an 80-per-cent allocation to equity investments, stick with it unless your objectives change, or your risk tolerance does. A stock pratfall is not an excuse to abandon equities. If anything, you might consider buying more when they’re cheap. This is where your financial coach can be tremendously helpful — keeping you focused on your goals and helping you to ignore market noise.
5. The ‘Hail Mary’ rarely succeeds A Hail Mary is that last-play desperation pass that the quarterback tosses into the end zone in the hope that one of his receivers will miraculously snag for the winning touchdown. It almost never works, and when it does it’s usually because of some fluke bounce off of a player’s hands.
Your financial Hail Mary might be some high-risk investment that you hope will salvage your retirement, a lottery ticket or an investment loan. Those things rarely work, and often have the exact opposite result — scuttling your financial dreams. Success is built on good planning, not big risks.
These are five things that I think will help you succeed financially.
Wayne Rothe, Certified Financial Planner/Branch Manager/account representative, Wayne Rothe & Associates Wealth Management, Manulife Securities Investment Services Inc., , 780-962-1146, Spruce Grove, Alberta. These comments are the author’s and not necessarily those of Manulife Securities Investment Services Inc. Mutual funds are offered through Manulife Securities Investment Services Inc. Insurance products and services are offered by Wayne Rothe, an independent insurance representative.