What You Need to Beware of When Finding Great Mutual Funds – Rich As A King Episode 142

What You Need to Beware of When Finding Great Mutual Funds – Rich As A King Episode 142

When looking to invest in great mutual funds or make any other investment decisions, understand what “survivorship bias” and “creation bias” are and how these can become potential pitfalls. Biased decision-making can also affect the world of chess. Listen to learn what biases you should look out for both in investing and on the chessboard.   For more about investing in mutual funds, read... Click for more
How Basic Chess Tactics Can Help You Make More Money

How Basic Chess Tactics Can Help You Make More Money

Applying basic chess tactics to running your finances can help you become a better investor. How? Here are some examples: Look at the whole board One of Grandmaster Susan Polgar’s most important lessons when coaching chess is to “look at the whole board.” In both chess and investing, you need to base your decisions not only on your current situation but also on the big picture. While the squares directly in front of you may seem to be totally clear from any danger, other squares that are slightly further away may be more perilous for you. Similarly, when you make investment decisions, look at the long term as well as at your current situation. Take small steps to success Very often, a game of chess is won through taking small steps rather than through sweeping, dramatic moves. A good strategy is to build up both your attack and defense gradually, accumulating small advantages along the way. Similarly, as an investor, you need to take small steps, such as putting away regular savings and contributing to retirement accounts. When you take small steps to increase savings, you let the magic of compound interest and time work to your advantage. Review your strategy Chess players continually review the tactics and strategies they employ on the board in order to improve their game. In the same way, you should review your finances on a regular basis. Life, like the chessboard, is always in motion, so make sure that your financial plan continues to be relevant for your personal situation. By making regular financial reviews, you’ll have a better grasp as to when... Click for more
What Do Warren Buffett and Susan Polgar Have in Common – Rich As A King Episode 141

What Do Warren Buffett and Susan Polgar Have in Common – Rich As A King Episode 141

What tactics do Warren Buffett and Susan Polgar use when making investing decisions and playing chess? How can an investing tactic be applied to chess, or vice versa? Discover why Warren Buffett says you should invest within your circle of competence and how building a “moat” protects your chess pieces and also the stocks in which you... Click for more
Why It’s Important to Know Your Risk Level before You Invest

Why It’s Important to Know Your Risk Level before You Invest

Understanding your risk level is one of the most important parts of financial planning. Here’s why: Imagine you’re playing chess and you’re about to move your queen to a particular square. Making this specific move may put pressure on your opponent’s king, but when you look at the entire board (the big picture view), you see that you might also lose your queen in the process. Is your possible gain worth the risk of losing your most important piece? You need to evaluate the risk-reward ratio of your move… both in chess and in investing. Risk of loss vs. possible gain Generally in the finance world, the riskier the product, the greater its potential for gain – and loss. Every investor needs to balance the odds of losing money against the possibility of a profitable outcome. Ask yourself: What would I do if one of my investments dropped 20% in value? Would I be able to continue meeting my financial goals? Would I sell and lock in the losses or do I have the time before I actually need to use the money, such as when I retire, to hold the position (or another) and try to recoup the losses? It helps to avoid euphemisms. “Risk” is simply a more acceptable way of saying, “you might lose money.” Among financial analysts, common synonyms for the word “lose money” are “market correction” or “adjustment.” These expressions can make losing money sound more palatable.  However, when you want to understand your own risk level, don’t ask yourself if you could survive a 20% drop in your account. Try using more specific... Click for more
How to Protect Your Money from a Market Crash

How to Protect Your Money from a Market Crash

Market crashes are inevitable. Just as they happened in the past, they are also likely to occur again in the future. So what should you do to protect yourself from a volatile market? Chess strategy can help you deal with volatile markets The following anecdote, from the world of chess, provides an insight on how to deal with a bad situation (like a market crash) when it occurs: In November 1986, the World Chess Federation (FIDE) decided to intervene in the chess rating system. In an unprecedented event, they granted all woman chess players 100 extra bonus points – except for Susan Polgar. They claimed that since she competed mainly against men, she did not need the extra points. Besides the unfairness and humiliation that it caused, FIDE’s decision hurt Susan’s ranking and she was displaced from the top of the list of world-class chess players. But instead of giving up, Susan continued to work hard to regain her top position. She earned her Grandmaster title and became the world champion. Susan’s sudden and unexpected loss of her rating could be compared to a stock market crash, which can also be unpredictable and sudden. If your stock portfolio takes a dive, it is important to hold onto your stocks if the fundamentals are still sound. The moral of both Susan’s story and how to react to a downward trend in the market is the same: bad things will happen, but if you give into despair it will be difficult to get back on course again. Is there anything you can do before the market crashes? While moving on and... Click for more
Can Using This Chess Technique Increase Your Chances of a Successful Retirement? – Rich As A King Episode 139

Can Using This Chess Technique Increase Your Chances of a Successful Retirement? – Rich As A King Episode 139

A “fork” is a chess technique that involves using a single piece to attack two targets simultaneously. How does this move work, and how can you apply it to retirement planning? Listen to this financial podcast to get tips and advice on how to utilize your assets to achieve more than one investment goal at a... Click for more
Why Time Pressure Can Cost You a Fortune

Why Time Pressure Can Cost You a Fortune

Grandmaster Garry Kasparov gave Grandmaster Susan Polgar’s chess team a good tip for dealing with time pressure when he told them, “Always keep ten extra minutes on the clock, or you will end up making rushed decisions.” When you feel pressured by time, it’s easy to make a move that you may later regret. Time pressure can make you feel cornered and desperate, and you may end up moving randomly, feeling accomplished as long as you did something. Take time to make balanced decisions The effects of time pressure are not only felt on the chessboard, but can also be felt in your financial life. For example, pressure to buy/sell a particular investment immediately so you “don’t miss out on a great opportunity” may cause you to act without thinking. Before you make any financial move, you must decide if it is really the best move for you at this time. Tips for minimizing time pressure You can limit time pressure in your financial life by using time more effectively. Save time by paying your bills online or through an automatic payment system. Automate your savings so that you always pay yourself first. This way, you know that it’s done. Organize your time so that you use it productively. Unlike your investments, if you lose time, you can’t make it back. Create a daily calendar, scheduling your tasks to make sure you accomplish the most important things first. When you build your plan, remember to add those ten extra minutes to cover the unexpected things that may cause you to make a rushed decision (remember Kasparov’s advice above?). Efficiency,... Click for more