Stick to Your Game Plan
You’re through nine holes in a round of golf and you’re playing a great round so far. At the turn, you think to yourself “If I keep this up, I’m going to have my best score ever!” Your game plan has worked great thus far, but now that you’ve had a great front nine, you decide to become more aggressive so that you can play even better on the back side. You hit your tee shot in the fairway on 10, then proceed to hit it in the water on your 2nd shot. Your next shot ends up in the bunker, and eventually, you 2 putt for triple bogey. You’ve just played 9 great holes and ruined your round on the 10th hole.
Manage Your Emotions
Getting emotional is a natural human response to both success and disappointment. This applies not only to golf, but also your investments. It’s natural to get excited when your account is doing well, and to feel anxious or discouraged when we see volatility like we did in 2022. However, sticking to your game plan tends to be the best course of action. From the beginning of 2019, through the end of 2021, if you had $100,000 invested in the S&P 500 Index (SPY), you would have made approximately $92,000. However, by June of 2022, your $192,000 would’ve decreased to around $132,000. Many investors reacted emotionally during this decline and either kept some cash on the sidelines or sold a portion of their holdings to avoid further losses. If you would’ve converted to cash in June last year, you would’ve missed out on about $25,000 of appreciation over the following 12 months.
The Importance of a Coach (Advisor)
While it's natural to be emotional about your money, it’s best to have an advisor or team that can put things in the proper perspective for you and keep your long-term goals in mind. There’s a saying in golf, that "you can’t win the tournament during the first round, but you can definitely play yourself out of it." The same is true in investing. You likely won't accomplish all your goals in one year, or even 5 years, but with one bad decision, you can definitely hurt your chances of “winning the tournament.”
At Olistico Wealth, we work hard to understand your entire financial situation so that we can guide you through the ups and downs and help you make well informed decisions. We are fiduciaries, so we have an ethical and legal obligation to put your interests above all else, and we take pride in your success. As always, feel free to reach out to us with any questions you may have (even golf questions).
Golf and Investing
September 22, 2023