The World Cup of Financial PlanningSubmitted by Concierge Financial Planning, LLC on June 24th, 2018
The World Cup is off to a great start. No sooner had I filled out my statistically based bracket, and the underdog Mexican team defeated the favored Germans. The revelry in Mexico allegedly set off a small earthquake! As you watch this exciting international contest this summer, keep in mind that the FIFA teams can teach us about more than just soccer.
Yes, as a fee-only financial advisor I know that lessons learned on the field can be applied to personal finance and, when executed with skill, can change your life much like a victory in the final might change the life of Lionel Messi! Let’s consider what the world’s national teams can teach us.
Can you imagine what a soccer team would look like if it only had a defense or an offence? Other than lopsided, this team would be a bunch of losers. To make it to the final the German National Team of 2014 and the Brazilian National Team of 2002 had to have well-balanced offenses and defenses—and so does your portfolio. You will not have a great chance of achieving retirement bliss if your portfolio is purely defensive. In addition to the safety of cash and fixed income, you need a state-of-the-art offense, which includes exposure to equities—small and large, domestic and foreign.
Similarly, every player can’t be a forward. How well would Brazil do with a team just full of Neymars? Not very well. A successful team specializes. The Brazilians and Germans have forwards such as Neymar and Müller for shooting and scoring, midfielders like Casemiro and Toni Kroos for versatility and maintaining possession, defenders like Thiago Silva and Jerome Boateng for denying penetration, and goalkeepers such as Alisson and Manuel Neuer for preventing the opposing team from scoring. You need to specialize too—think about using bonds for income, stocks for growth, and real estate or natural resources for diversification.
Next let’s look specifically at offensive strategies. Both the Argentines and the French run solid hurry-up offenses, which means they get in more chances to score. We all know that you can’t score a goal if you aren’t passing and shooting the ball. Similarly, you can’t expect to grow enough funds for your financial goals if you are not taking action by proactively saving and investing. Been planning to get to your finances for a while but don’t seem to have time to get your financial ducks in a row? Stop making excuses and just do it! Run the plays like the Argentines and the French and, with a little luck, you may all be able to score financial goals!
Team building is another crucial part of success in soccer. The various players and special teams need to be able to work together and leverage each other’s skills. To be successful financially, you need to build a strong team too. It’s not all about the investments. You can’t forget about budgeting, insurance, and estate planning. You may have nothing to invest if you are not budgeting. You also need to be prepared for the unexpected. With the proper insurance policies and estate documents in place, your financial plan has a higher probability of success no matter what surprise plays come your way.
Finally, let’s remember that these teams have not been idle all season. They have been hard at work every day practicing the skills and strategies they know will make them champions. We all know what would happen if a team that had not been practicing all season showed up to play against another team that had been. Don’t be those idle players. Every fee-only financial advisor can tell you that practice does make perfect and establishing good, every-day financial habits will yield greater returns than acting on your finances only once a year when tax time rolls around.
So, when Cristiano Ronaldo goes for the goal over the next few weeks, ask yourself if you are doing likewise.
With thanks to André Souza.