Oh boy, late summer into early fall, what a tremendous time of year, right? The beaches are still beautiful, the ocean water is at its peak warmth, and perhaps best of all, the kids return to school! Not to mention, football season begins! Now, I’m just about as much of a New England sports fan as the next person, and I get child-like excitement thinking about the Patriots starting up. Also, I love the feeling of drafting a new fantasy football roster and competing for another season with my colleagues/friends.
When assembling our weekly roster, it’s easy to get sucked into a whirlwind of stats, hot takes, and sports prediction voodoo. We’ve all been there, haven’t we? It’s hard not to get swept up in it all; the parallel of fantasy football and financial advice/strategy is more aligned than some may have ever guessed. The rush of sourcing players and taking risks each week can become exhausting when trying to account for all the differing opinions, and the same goes for financial planning. Without a strong foundational guide, direction, and core goals, we can get lost and drift from one opinion to the next, never finding steady success.
Risk vs. Reward – It’s a Balancing Act
There’s a balancing act In both fantasy football and financial planning. Striking a balance between risk and reward is crucial. It’s similar to building your team with dependable “rock” players and taking a chance on a few sleepers. In finance, in my opinion, this translates to creating a solid foundation with less risky investments while allocating a small portion of your portfolio to more speculative picks.
Expected Values and Critical Thinking
With fantasy football, you’re constantly weighing the potential points a player could bring against their risk of injury or underperformance. Similarly, when investing, you need to consider the potential return of an investment against the likelihood of loss. The goal? To have a small range of potential outcomes, which may reduce risk and may increase predictability.
The mistake many will make: you cannot simply follow a once-size-fits-all solution, which many do in fantasy leagues and financial planning! Critical thinking is an absolute must. No matter how many AI-generated prediction machines provide a positive percentage of success, they won’t match the instincts and adaptability of the best in the business. How many times have you started a player because you were told the chance of success was 72%, going against your intuition, only to lose!? There are intangibles that seasoned professionals can account for that algorithms cannot.
Value Investing and Playing the Long Game
Value investing may be akin to drafting a player who consistently performs well but isn’t necessarily a superstar. It may not be as exciting as picking a hot, up-and-coming player (or a high-risk, high-reward stock), but it may provide stability and steady growth. This approach might not make you the Warren Buffett of your fantasy league overnight, nor will it transform your portfolio into a gold mine instantly; however, it can yield positive results over time, and the flashiest/splashiest option is not always the best long-term decision *cough* Johnny Manzel, RGIII, and Ryan Leaf, anyone?
Don’t Get Storrowed
While this analogy doesn’t have much to do with fantasy football, for Boston residents, it is almost a seasonal sport hearing about how many moving trucks will get “Storrowed” during the college move-in season, late summer/early fall. Yes, for those unaware, “Storrowing” is when a box truck or some other tall type of vehicle gets stuck under one of the many low-height bridges along Storrow Drive; despite all the visual warning signs and literal hanging barriers, it still manages to get at least 1-2 drivers per day in the height of the season.
Despite all the clear wanging signs around them, these drivers are so bent/fixated on following their GPS (which doesn’t know it’s wrong) that they’ll ignore their intuition and mindlessly follow the pre-plotted path, regardless of needing to detour; this is an apt example of how not to go about your financial planning. Don’t put your faith in the “standard” route just because many others have been down it, and it may not work (or fit) your goals/needs.
Taking a shortcut and ignoring the warning signs around you versus the time saved is not worth the risk.
Are You Confident in Your Risk vs. Reward Strategy?
The principles remain the same whether you’re assembling your fantasy football team or building your financial portfolio. It’s about understanding the balance between risk and reward, making calculated decisions based on expected value, and choosing a strategy that aligns with your personal goals and risk tolerance.
My career as a family financial planner is based upon weighing risk vs. reward. I need to be that foundational pillar to help keep my clients heading toward the right direction, regardless of injuries, suspensions, or deflated footballs (too soon?)
Whether you’d like to discuss your fantasy roster or financial planning strategies, my door is always open! Click the link below to book a call.
