Here are three commonly used chess strategies that can be applied to both chess and investing:
- Never give up
Playing chess can be challenging. Sometimes you may feel as if winning a game is an elusive goal. Yet, even in these difficult situations, don’t give up. While resigning will definitely result in a loss, you will never know what may happen if you continue playing. Maybe your opponent will make a mistake, allowing you to win the game, or at the very least, you might have a stalemate. The opposite of winning isn’t always losing.
You may be tempted to change your investing strategy if the market is “underperforming.” Yet, as long as your investment strategy is solid, don’t be quick to revise it. Market swings are inevitable, so stick to your asset allocation and investment strategy as much as possible. An effective investment strategy takes into consideration market fluctuations and strives to maximize gains while minimizing losses.
- Work as a team
Although chess may look like a solitary game, chess players often play together as a team. They reach their joint goal, to bring victory to their team, by training together many hours a day. Each team has a coach whose job is to emphasize the different player’s strengths, to allow each player’s positive traits to shine. The team can only win once everyone makes a maximum effort.
Teamwork in investing is crucial if you want to see good results. You, or your financial advisor, are the head of your investing team. The team includes your spouse, accountant, lawyer, insurance agent, and depending on your situation, perhaps other professionals. View these people as teammates, and make sure there’s good communication and cooperative teamwork between all of you because only then, you could maximize your profits.
- Do a post-mortem
Serious chess players analyze the games they play, regardless of whether they won or lost. In their post-mortem they analyze their moves. Doing a post-mortem helps them learn what worked… and what didn’t work. After chess players understand their strengths and weaknesses, they can work to avoid their mistakes in future games.
Make sure you review your investments at least once a year. Examine their performance and try to learn from your own experiences. Understanding where your investment strategy created profits or losses can help you to continuously choose success over failure.
Applying these three strategies to your life will not only help you improve your chess skills, but will also help to assure you that you are heading down the right path to successful investing.
For other chess strategies that can be applied to personal finance, click here.
Douglas Goldstein, co-author of Rich As A King: How the Wisdom of Chess Can Make You A Grandmaster of Investing, is an avid chess fan, international investment advisor and Certified Financial Planner (CFP®).