Winning the Game of Retirement
Consider yourself an athlete in the sport of investing. Physical
endurance is important when it comes to the sprint, however
mental poise will see you through the long run. An investor can
have the most reliable information available, but with the
absence of emotional control, you may fail to reach the goal.
You should strive to be the Tiger Woods of investing and when
you reach the eighteenth hole, your score is based on the
portfolio's value. Upon retirement, you will know your ranking.
At this time, the more desirable position would be that of team
owner, not peanut-tosser.
It is in the world of sports, you may find relevant ideas for
retirement planning. There are no guarantees when it comes to
investing in stocks, yet you may want to consider the following
attributes shared by champions.
The first step in developing your portfolio is to put together a
team of all-stars. Forget the minor league players, you need the
Sammy Sosa's and Randy Johnson's to fill your roster. Relieve
the players with weak relative strength versus the index and
keep the ones with strong relative strength. If you are unaware
of these changing numbers, contact an investment professional
knowledgeable in this area.
Next, limit yourself to the number of players allowed on the
field. In football, for example, your team may only have eleven
players on the field while the play is live. Your team is
penalized for too many players. This seems to be a difficult
rule for many investors. As a coach, you may have drafted a
college superstar who turns out to be a professional dud.
Do not allow your self- esteem to keep the player in the game.
Analyze your back-up players and be aware of the time remaining
on your retirement clock.
Although it may be emotionally difficult to pull the stock,
keeping it may limit your overall score. You should always focus
on long-term fundamentals without neglecting short-term reviews
(ie: annual updates). This does not mean you become a speculator
of stocks; you just position yourself as the number one draft
picker.
If resources do not allow for adequate diversification, or if
you are new to investing, consider hiring a manager. In other
words, find mutual funds suitable for your investment risks,
time horizons, and goals. Your batting average is no better when
you hit a home run versus a single. It may be more exciting to
post a high slugging average, but even Babe Ruth struck out now
and then.
Another point worth noting is to keep your winners. Unless you
can find a better player for that position, let your winners
carry you to a championship. John Elway did it for the Denver
Broncos in 1999 at age thirty-eight. Remember, we pick our
starters because we believe in their abilities to outperform.
Still, it is vitally important to monitor your holdings. You may
one day decide to retire a player who does not fit into you
overall game plan. Until that time, remain focused on the goal
line and block out the noise of the market.
In the game of rugby, players advance the ball forward while
pitching it back to another player. The idea here is to look
forward, but never forget what the past teaches us. Players may
come and go, but victory never loses its appeal. We all look for
success in our investment portfolios and a time to take home the
gold. Keep a positive attitude and dedicate your resources to
winning the game of retirement.