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Take The Investment Shot, Or Go For The Bogey

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A Golfing Themed Look at Investment Strategy

goforthebogeypicDon’t fret grasshopper, this post isn’t entirely about golf so whether or not you are a fan of the sport please read on.  I must stress that I am not a financial or investment advisor, the following post is my opinion only and I would recommend that you do your own research before making any decisions with your money.  This post is about taking risks with your money.  I know that is an incredibly scary thought but I am talking about calculated and educated risks not throwing caution to the wind.

This is where the golf analogy comes in.  When you are out on the course and slice the ball into the woods you are often left with a difficult decision.  You stand there in a forest and can barely see the flag for all the trees and lush greenery around you.  You look to your left and have a wide open view to get back on track on the course.  You think to yourself “If I can just get around that tree I can make the shot of a lifetime and be putting for a birdie!”  Hold up Tiger, it is more likely that you hit that tree and the ball will go even further into the depths of nature.  If you take the safe shot, it’ll cost you a stroke but you are almost guaranteed to minimize the damage of that bad drive.

Taking The Shot

This is one of the scariest things to do with your money.  Your budget is limited and a bad decision or sudden turn in the market can put you in a disastrous situation.  That being said, a well-timed and properly executed move can free up some serious cash that everyone would love to have.  So when do you take the shot?  A couple of things you need to check off first.

Most importantly, if you are in a partnership where you make joint financial decisions it is critical to consult with your partner and agree with the plan before taking the leap.  Remember White Men Can’t Jump, Woody Harrelson didn’t get on the same page with Rosie Perez before betting Wesley Snipes all their money that he could dunk…and she ended up dumping his behind.  Don’t be like Woody, have the talk. I’m aware that reference ages me, I’m on the older end of the Millenial spectrum.  You might not even know who these actors are.  Woody Harrelson is in The Hunger Games, Wesley Snipes used to be kind of a big deal in action movies (still hoping to see him come back as Blade in the Marvel Cinematic Universe) and Rosie Perez was on The View for a while.

Secondly, do your research.  Making investment choices really isn’t as simple as Buy Low Sell High – if it was we’d all be rich.  Just like that golf shot from the trees you need to know when to go high loft, when to punch it, what club to use, how to stand and where to aim.  Choosing to take the shot doesn’t mean throwing caution to the wind, so you need to be prepared for the shot you are going to take. While I don’t have any affiliation with these organizations, I use the research tools like you can find on Blackrock, read articles on from Money Sense magazine, and any random articles that come across my Google Now feed.

Lastly, be prepared for the consequences.  Even the best golfers in the world end up in situations where they try something bold and end up worse off.  With golf, it is just a game – if you have a bad day on the course you still get to go home, live your life and hopefully be happy that you got out for a round.  When it comes to money, the results can be much worse if you aren’t prepared.  So before taking the shot, my recommendation is to make sure you don’t have everything riding on success.

Go For The Bogey

If you prefer, the safer way to go is get out of the woods and continue to play.  You are guaranteed to have a worse score then if you succeeded with that miracle shot but you should also be safe from an epic meltdown.  This isn’t giving into defeat though – it is more often than not the smarter decision on what to do when you are in a bit of a budget bind.  The same steps apply here that did for taking the shot.

This isn’t a decision you should make solo if your finances are joined with another person.  Sarah and I strongly believe in communicating about what we do with our investments, which is why we started Couple of Sense as a team.  Talk about your situation, what happened to put your off course in the first place and what are the pros and cons of each approach to getting out of trouble.  Not to overdo the golf theme, but most pro golfers consult with their caddie before making their decision on what to do.

You still should do your research, even though you are leaning towards taking this safer route you don’t want to ignore what could be a golden opportunity.  Tech stocks for example tend to be very volatile but a lot of people invest in them – so there has to be some logic to going that route.  Consider your portfolio as well – if you already have a nice base of savings in safe and secure investments you are a bit safer on taking a risk on a few unknowns.

Also, be prepared for losing that stroke.  If you are going to play it safe you have to accept that you are going to get a bogey on the hole.  There is absolutely nothing wrong with bogey, you aren’t on the PGA so nobody expects you to play a perfect game.  Once you decide to go this route, be confident that you’ve made the right decision instead of dwelling on what could have been.

What Do I Do Then?

As I mentioned, I’m not a financial advisor – and any advice I would want to give you would change based on where you live, what you have and what the market is doing so there is no way I could possibly tell you what the best choice is.  When golfing I can tell you that I’d always go for the bogey, but I’m much better at finances than I am at golf.  One thing I can tell you that is universally true no matter where or when you are reading this – think it through, talk it over and make an informed and educated choice.  Think about where you’ll be if you succeed, where you’ll be if you don’t and what you are prepared to do.

“The most important shot in golf, is the next one” – Ben Hogan

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2 comments

  1. Keeping with the gold theme, I feel like I’m going for par instead of trying to get an eagle. I dollar cost average into well diversified index funds. I’m not shooting for the best possible returns. Instead, I am going for average because average is a whole better than most people on the course!

    • Couple of Sense says:

      Thanks for continuing the analogy Thias! I would definately take shooting par any day, both in golf and on my investments. Unfortunately those weather conditions (ie oil prices, foreign markets) play too much of a factor to guarantee any significant rate of return. I think your strategy of diversifying into index funds is a good bet, we aren’t dealing with play money here so real world dollars require careful thought and research. Most index funds have a track record of a decent rate of return and while growth isn’t guaranteed like a GIC – at least you aren’t sinking your retirement fund into penny stocks.

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