What Golf Can Teach Us About Investing

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By Chad Rixse, CRPS®

If you’ve ever watched professional golf or played golf yourself, you know it can be a challenging and competitive game. So much can go wrong so quickly, and the margin for error is slim. To be successful in golf, there’s a number of skills to master that are similar to the skills you should master if you want to be a good investor.

Get off to a Good Start

In golf, your first shot on each hole should strike the middle of the fairway and set you up for a great second shot. When you're investing, you want to start as early as possible, contribute to your portfolio as much as possible, and build a strong foundation so you have more options later.

Strategy Is Strength

Knowing your options, in addition to your limitations, each time you approach the golf ball is essential to becoming a strong golfer. A strong golfer is strategic. they know how to balance the options available with their known limitations. Sometimes going straight for the green on your second shot isn’t your best play, instead, it’s safer to lay up where you’ll have a better approach shot.

When investing, it's important to find a good mix of investments that both suit your desired level of risk and consider your long-term goals and needs. You have to think strategically about the path you take to get there.

Stay Calm in the Storm

Even professional golfers don’t always hit a perfect shot, sometimes they end up in the sand. What's important is they remain calm and approach the next shot the same way they approach every other shot—cool and collected.

To be a successful investor, you have weather market volatility and fluctuations with that same level of calm.

Pick the Right Clubs

A good golfer would never walk onto the course with an incomplete bag. Instead, a good golfer has a variety of different clubs meant for different types of shots on the course. A successful investor is the same way with their portfolio. They have a diverse set of investments that can create new opportunities but can also help protect against market volatility. Each club in your bag or each holding in your portfolio has its own role to play. (For related reading, see: The Importance of Diversification.)

Take Some Lessons

We all know the saying “practice makes perfect.” We know becoming an expert requires a tremendous amount of practice. If becoming an expert is your goal and all that practice is only continuing to instill bad habits or poor form, you can’t expect those habits to change. Lessons can get you back on the right track. Both in golf and investing, lessons will help you perfect your form, develop smart strategies and ultimately perform better.

It’s amazing how many similarities can be drawn between golf and investing. You may have noticed that many successful businessmen/investors are avid golfers. They view golf and investing as equally challenging games with the potential for tremendous reward. Both require mindsets geared towards delayed-gratification—you put in the hard work now, remain calm and patient, be strategic, and just stick with it. There’s always something new to learn and there’s always room for improvement. 

(For more from this author, see: Don't Let Emotions Derail Your Investment Decisions.)

This article was originally published on Investopedia.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Investing Ideas , Stocks

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