As many of you will probably know, I’m a keen golfer.
In Hong Kong, I usually play at Kau Sai Chau, but have also been lucky enough to have been invited to play the spectacular Hong Kong Golf Club courses by a few clients in the past.
I also have a UK membership at a club south-east London and play as often as work and child commitments allow.
When playing a round of golf, “course management” is a key element of success. This involves considering the risk v reward payoff’s for the shot you are facing. So, during a recent solo round I was playing, I started considering the lessons golf can teach you about financial planning.
After all, it’s a sport that requires patience, resolve, disciplineand commitment – all of which are useful skills to apply to planning your financial future.
So here are five lessons a round of golf can teach you about financial planning.
1. You will often have to balance risk and reward
As you read in my introduction, it was the concept of “risk v reward” that inspired this article.
There’s a treacherous bunker with steep sides half-way down a fairway on one of the holes at my home course. I’ve probably spent more time in that patch of sand than I have on any beach in the last few years!
A perfect drive off the tee will clear it leaving a short pitch into the green, but it’s a high-risk shot as any misjudgement can result in me having to get out my sand wedge, with my hopes of finding the green in two being buried there (along with my ball sometimes if I’m really unlucky).
The safer, lower-risk option is laying up short of the bunker with an iron off the tee and a longer pitch onto the green, but with a much better chance of success overall.
Over the course of a round, you will often have to assess risk and reward, and there are direct lessons to take into your investment strategy.
Successful investing isn’t about making the biggest returns in the shortest possible time. Not every investment needs to be perfect. Simple choices, like simple golf shots, can mitigate risk and help you to consolidate what you have.
2. You need to focus on your own goals
Golf is a great opportunity for a relaxing walk with friends and some light rivalry, but ultimately it is about you getting the ball from the tee into the hole.
On your way to the hole, you may well end up taking a totally different route to the rest of your group as you explore different sides of the fairway. Even if you do follow the same path, your club preferences may be different, so you need to concentrate on your own game.
Every player has a different balance of skills and will measure success, failure, and improvement on slightly different scales.
Likewise, what works for you during a round of golf can be applied to your financial plans.
The headline goals may be the same – a secure financial future and the means to enjoy the retirement you’ve worked hard for – but your plans are likely to be different.
To see the best results, you need to concentrate on your round and stay focused on your long-term goals.
3. It’s important to be patient and overcome external factors
For something so ostensibly relaxing – effectively a walk in countryside with friends – golf can be a frustrating game. Not only does it require long hours of practice, but it also requires you to stay calm and keep a cool head.
External factors can also play a part. Variable weather conditions are part-and-parcel of playing any outdoor sport in the UK. But being a sport that involves the flight of a small ball over long distances, a round of golf can be particularly affected by intemperate weather conditions.
There will be sunny days without a breath of wind when your eye is in, and every shot turns out as you imagined it as you were standing over the ball.
But there will be others when your game is off, and a gusting wind is testing your patience and nerve to the limit.
The same can apply when it comes to growing your wealth, and dealing with financial issues throughout your life. You may well face personal financial setbacks and be affected by external issues such as investment volatility and poor economic conditions.
If you’re playing golf you need to simply focus on the aspects of your game that are within your control, and you’ll need to think similarly when it comes to your investment portfolio.
4. There’s a club for every occasion
You can carry up to 14 different clubs in your bag when you’re playing a round.
There’s a different type of club for the range of shots you’ll need to play. Drivers for distance, irons for approach play, a wedge to extricate yourself from sand or thick undergrowth, and your putter to finally get the ball in the hole.
In the same way, your financial plan will consist of a series of component parts. Each of these will have different objectives and eventualities such as protecting your loved ones in the event of you being incapacitated, investment holdings designed to grow your wealth, different tax wrappers to give flexibility over how you draw off your investments in retirement, and your legacy planning.
5. It’s important to get advice
When I was younger, me and some of my friends at my course in Yorkshire would “volunteer” by caddying for visitors to my local club when there was a club match on.
It was a great way to get involved in the men’s matches from a younger age. I also occasionally earned a decent tip if the person I was caddying for had a good round.
Every so often I’d be asked, “how far do you think it is to the green from here?” or “do you think I should take a five or a six iron?”
Thinking about it now, it was my first experience of giving advice.
Now it’s me asking for advice. In the same way I will stress the importance of regularly reviewing your financial plans, I will occasionally book a lesson with our club pro to review my game and check I’m not picking up any bad habits.
Caddying for someone is literally taking a weight off their shoulders. Metaphorically, our aim at Charlton House is to do the same for our clients.
Get in touch
If you would like to talk about your financial planning please contact us by email or, if you prefer to speak to us, you can reach us in the UK on +44 (0) 208 0044900 or in Hong Kong on +852 39039004.
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