Wimbledon started last week, and while many of us watch in anticipation, there’s a lot we can learn about investing from tennis. There are some useful parallels between tennis and using a sensible investment strategy. Whether facing a big decision, such as retirement or helping family, we look at how you can gain a competitive advantage with passive investing.
What tennis can teach us about markets and investing
“When you lose every second point on average, you learn not to dwell on every shot. The best in the world are the best because they know they’ll lose again and again – and they know how to deal with it.”
Roger Federer
Did you know that in a sporting career of 1,526 singles matches, played between 1998 and 2022, Roger Federer only won 54% of the points? Regarded as one of the greatest ever tennis champions, Federer’s consistent performance led him to victory in 80% of matches.
So, how can we apply this logic to investing? In an increasingly unstable world with the looming threat of geopolitical conflicts, no one can predict what’s going to happen. However, it’s always better to spend time in the markets, instead of trying to time the markets.
It’s a fact of life that markets will rise and they will fall. But with the right investing strategy, we can plan ahead and prepare accordingly.
Gaining an advantage
“A champion is defined not by their wins but by how they can recover when they fall.”
Serena Williams
As geopolitical events can lead to market volatility, this is one of the reasons our team use an ‘investment bucket strategy’. At Balance: Wealth Planning, we split your money into different pots based on when you need it. So, you can manage your investments efficiently and passively, while retaining access to cash as and when it’s required.
Below is a summary of our passive investments approach:
- Short-term money 0 – 3 years: This strategy gives you access to money in the next few years. Held in cash or low-risk assets, it’s not affected by market swings.
- Medium-term money 3 – 10 years: This approach involves taking on a little more risk.
- Long-term money 10+ years: This strategy involves investing for growth – your money has time to recover from market volatility and will benefit from compound growth.
The above structure ensures you don’t have to rely on guesswork, market timings, and you won’t be forced to sell investments at a bad time. So you can be free to live your life instead of watching the markets in trepidation.
Reaching a break point
“I’m a very positive thinker, and I think that is what helps me the most in difficult moments.”
Roger Federer
If you’ve used a sensible ‘investment bucket strategy’, you can look forward to attractive returns. When you’re approaching retirement age, you’ll want to ensure your investment journey has been worthwhile. At this stage, you’ll be expecting to see good returns from long-term investments that have been designed to withstand market volatility.
Remember, every year for the past 50 years, there’s been a big reason why someone shouldn’t invest. Whether it’s a recession, an election or a pandemic, there are lots of factors that can affect global financial markets. However, if you have stayed consistent and patient, investing wisely with a sensible strategy, then you can look forward to better returns.
Game, set and match
“My greatest point is my persistence. I never give up in a match.”
Bjorn Borg
Patience, consistency, strategy, and avoiding reactive decisions are the keys to successful investing. In the short term, there are things you can do to bolster your investment strategy.
Here are a few checks to carry out when you’re reviewing your money:
- Are you making the most of your ISA allowances this tax year?
- Have you used your Capital Gains Tax allowance, or do you have any losses that could offset gains?
- Is it time to consider gifting or Inheritance Tax (IHT) planning?
Before you retire, start drawing an income, or help a family member, make sure that your current setup is right for your needs. There may be some small, smart tweaks to your current strategy that could make a big difference in the long run.
Proud to be a top 100 financial adviser firm
At Balance: Wealth Planning, our no-pressure approach will give you perspective so you can make informed decisions about your money and your investments. Our financial planners provide a sensible and calm approach to investing so you achieve your objectives.
Our team work hard on your behalf to provide investing opportunities that are aligned with your values and financial goals without compromising returns. We also offer Good Practice Portfolios for ESG-conscious investors. See our Balance Wealth Investment Philosophy.
For advice on your investment strategy, get in touch with our financial planners.
Sources:
https://vimeo.com/manage/videos/1075676291
https://balancewealthinvesting.uk/good-practice-portfolio
https://en.wikipedia.org/wiki/Glossary_of_tennis_terms
