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Drive for show and putt for dough: what golf can teach you about investing
TD Waterhouse's Drew Abbott and golf pro Rémi Bouchard offer lessons from the links to help reduce your financial handicap
TORONTO, June 28 /CNW/ - Can lower scores lead to higher returns? Will longer tee shots translate to larger T5s? Sure, if you are one of the world's top golfers, but for those who play golf for fun, Drew Abbott of TD Waterhouse Private Investment Advice and professional golfer Rémi Bouchard offer lessons from the links you can apply to your investing, and lower your financial handicap. It gives going for the green a whole new meaning.
"There are a myriad of similarities and lessons that hold true in golf and investing: from the risks and rewards of being aggressive to over-thinking a decision because of too much analysis," Drew Abbott, Vice President, TD Waterhouse Private Investment Advice and avid golfer. "Golfers can take advice, tips and analysis they learn on the course and apply it to their investing behaviour."
"The most important thing I teach in my lessons is that there is no one correct way to swing a club - that holds true if you shoot in the 70's or are just taking up the game. There are a few proven fundamentals but otherwise plenty of ways to get the ball in the hole," says Rémi Bouchard, professional golfer and avid investor. "The most successful golfers combine intuition, discipline, sound fundamentals and expert advice."
Abbott believes those same traits can be found in successful investors. "Most successful golfers adhere to a strategy comprised of shots they have practiced, combined with the occasional high risk, potentially high reward play. The same attributes can be found in the portfolios of savvy investors."
Abbott and Bouchard offer the following tips to help improve your investing game.
Have a game plan: The world's top golfers have a plan for every round they play - which clubs to hit on each hole, which flags to fire at, even when to be aggressive or more conservative. It is important to stick to the plan, but just as important to be ready to amend it if things are not working.
The same applies to investments. You should have a financial plan that clearly defines both long and short term goals and use it to build a solid, diversified portfolio of bonds, stocks and other investment products. "Sticking to the plan is important, but you should be prepared to routinely analyze and adjust," says Abbott.
Stick to the fundamentals: What most great golfers have in common are sound fundamentals. The swings may look different but you can be certain the key fundamentals like grip, swing plane or impact position are similar and practiced often. Fundamentals are the foundation of a strong game.
"Every strong portfolio is based on a solid financial plan that reflects your decisions on three fundamentals: your investing goals, the required rate of return and your tolerance for risk," explains Abbott.
Seek expert advice: "If you want to improve, you can always benefit from expert advice," says Bouchard. "If the top golfers in the world have coaches, shouldn't you consider it?"
A trusted financial advisor can help meet your investing goals, such as planning for your retirement, the birth of a child or other major life change. The key is to find someone you trust. Do your research and make sure you agree with their philosophy.
Stay in your comfort zone: Professional golfers will never try a shot in competition that they haven't practiced. The confidence to play at the highest levels comes from the belief they can pull off the shot they are facing. Without that belief, the shot would be doomed. Unnecessary risks or trying something new on the course are mistakes high handicappers make, not seasoned players. Taking a gamble is usually done only after careful consideration.
The key to successful investing is understanding and respecting your risk tolerance. It is important to be comfortable with the types of products, the level of risk and the dollar amounts that you are investing.
As Abbott advises, "unlike golf, there are no mulligans with investing, so you have to work with your advisor to assess your risk tolerance, your goals and create a plan that is right for you."
About TD Bank Financial Group
The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Financial Group. TD Bank Financial Group is the sixth largest bank in North America by branches and serves more than 18 million customers in four key businesses operating in a number of locations in key financial centres around the globe: Canadian Personal and Commercial Banking, including TD Canada Trust and TD Insurance; Wealth Management, including TD Waterhouse and an investment in TD Ameritrade; U.S. Personal and Commercial Banking, including TD Bank, America's Most Convenient Bank; and Wholesale Banking, including TD Securities. TD Bank Financial Group also ranks among the world's leading online financial services firms, with more than 6 million online customers. TD Bank Financial Group had CDN$574 billion in assets on April 30, 2010. The Toronto-Dominion Bank trades under the symbol "TD" on the Toronto and New York Stock Exchanges.
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