The Surprising Parallels Between Golf and Investing


As a Managing Director and Wealth Advisor at Morgan Stanley in Chicago, I spend a great deal of time counseling clients on financial goals and investment plans. I also happen to be an avid golfer, hitting the range and sneaking in a round when time permits.

There is a fairly logical connection between golf and business, but it runs deeper than just negotiations and handshakes between tee shots. Over time, I have come to find that many of those basic golf 101 principles that guide our every stroke, also apply pretty intuitively to the investment arena.

By adhering to the following principles, you may find yourself shining, both on the course and in your portfolio.

Have a Game Plan

A detailed and comprehensive game plan is a critical component to achieving success on the golf course. Before even stepping into any tee box, you should be able to thoroughly explain your plan of attack for the hole. This means visualizing placement of the drive, having a club in mind for subsequent shots, as well as contingencies for hazards and other obstacles.

Investing requires a similar type of game plan. In fact, you should spell out a clear set of short-, medium- and long-term goals and objectives before investing your first dollar into the market. This plan can keep you on track and organized, while helping to ensure the different elements of your investment portfolio are working in tandem toward whatever you are ultimately hoping to achieve.

Remember, everyone has different strengths, weaknesses, goals and timelines. Therefore, it’s critically important that your game plan is unique to you, no matter whether it pertains to golf or investing.

Control your emotions

We’ve all been there – a string of errant tee shots or chips that not only impact your score on a particular hole, but toy with your psyche and focus for the entire round. All golfers know the sport is emotional and arguably more about mental fortitude than physical skill.

Investing is really no different. Especially in today’s day and age of instant access and a 24/7 breaking news cycle, it can be quite difficult to keep emotions out of investment decisions.

Most investors at least understand that they must commit to investing for the long-haul (decades not days as the saying goes), yet so many people fall into the habit of making rash and knee jerk decisions based on their emotions alone. [i] This commonly plays out during periods of market volatility, where day-to-day fluctuations unnerve investors to the point where they move money around in a manner counterproductive to their goals.[ii] Or, when the fear of missing out causes an investor to follow other investors or chase a hot tip, with no regard for how that move might impact their individualized plan.[iii]

With both golf and investing, the ability to keep an even keel through the highest of highs and the lowest of lows is key to maintaining focus and achieving your goals.

Weigh Risk Versus Reward

As golfers, it’s in our DNA to think we can make the impossible shots. We’d rather use a wood to try and clear the water hazard a couple hundred yards out, as opposed to laying up with an iron and taking the easier chip shot. Calculated risks and gambles are certainly a necessary component of the game, but far too many scores are driven up as a result of overly optimistic ambition.

When it comes to investing, the risk versus reward trade-off is similar. You always want to be sure your level of risk tolerance aligns with your age and time horizon to retirement.[iv] Young investors generally have a bit more leeway with risk, while those closer to retirement often take a more guarded approach. But in both instances, the ability to discern between reckless risk-taking and gambles that are calculated and measured can make a huge difference for your nest egg.

Keep in mind that in either scenario, there is nothing wrong with opting to play it safe. Both the market and the golf course tend to reward consistency over time.

Diversify Your Clubs

If you’re anything like me, you likely have a favorite club or two that you always trust on the course. I sometimes find myself wanting to go to that same club over and over, but realize that it’s crucial to develop a comfort level with my entire bag, from hybrids to the sand wedge. Without diversification in club choice, it’s rather difficult to become a well-rounded player.

Diversification also happens to be a core principal for investors.[v] Putting all your assets into only one or two sectors can create vulnerability in the event of volatility or a market downturn. Instead, learning to spread assets out over a variety sectors and securities generally mitigates the potential for over reliance, while helping your portfolio withstand shifts in the market.

Learn from Your Mistakes

Both golf and investing are incredibly challenging in their own ways. Even the most skilled golfers and the savviest of investors have made missteps. Whether it’s a slipping into a bad swing habit or trying too hard to time the market to protect against future fluctuations, you are sure to make your share of mistakes as well.

What’s most important in either discipline, however, is to take those mistakes in stride and use them as a teaching moment. This is how you get better and stronger moving forward.

Next time you hit the links, think through how many of golf’s most basic principles can offer direction and guidance in your investment decisions. See you on the course!

Kathy Roeser is a Managing Director and Wealth Advisor with the Wealth Management Division of Morgan Stanley in Chicago. The information contained in this column is not a solicitation to purchase or sell investments. Sources available upon request.







About Author

A Chartered Financial Consultant® and seasoned financial advisor with more than 30 years of experience, Kathy Roeser is the founder and leader of The Roeser Group at Morgan Stanley. She has dedicated her entire career to serving the financial needs of successful executives and multi-generational families around the country. Kathy’s successful practice emphasizes a three-pronged strategy that includes a goals-based approach to financial planning, tailored investment management solutions, and a commitment to providing outstanding service. She focuses on what is most important to each family, so she can develop a customized plan designed to build, preserve, and transition their wealth. Throughout her long and rewarding career, Kathy has been dedicated to educating investors about important matters impacting their wealth. She is a frequent contributor to financial news publications and appears regularly on Chicago-area television shows to discuss various financial topics. Kathy Roeser Managing Director Wealth Advisor The Roeser Group at Morgan Stanley 70 West Madison Street Suite 5450 Chicago, Illinois 60602

Comments are closed.