Managing your money

How the process of building an investment portfolio is like choosing your fantasy golf team

An investment portfolio requires research, thorough planning and proper execution

Building a fantasy golf team doesn’t sound that hard, does it? Pick a tournament, pick players and pick groups. It’s as easy as that. Building an investment portfolio, however, takes careful consideration and sounds like a much more daunting task, but you’d be surprised that they actually share a lot of the same mechanics.

Consult your guru

When it comes to fantasy sports, most people have a friend with seemingly endless knowledge. It’s always a good idea to run your fantasy picks by them to see if you’re making smart choices. Chances are, they’ll know something your research didn’t turn up.

When it comes to your investment portfolio, a financial security advisor/investment representative can be your guru. Your advisor can help you choose investments that are best suited to your personal situation. They’ve got the in-depth knowledge and access to resources that can help guide you in the right direction to assemble a portfolio that’s custom built to reflect your investment goals.

The playing field

All of golf’s major championships are played on different courses with their own challenges. How does this relate to choosing your portfolio? Think of the tournament – and its course – as the current economic landscape. Does the course favour a particular type of play? Are the greens fast or slow? Is the layout short or long?

When planning your portfolio, your advisor can determine the type of investments your goals favour. This can help them decide if you’ll be investing more conservatively with fixed income or more aggressively by investing in equities. Your advisor will keep your goals, time horizon, and tolerance for risk in mind.

Build a fantasy golf team like an investment portfolio, with research, planning and execution

The players

Here’s where research and planning will come into play. When choosing players for your team, you will need to focus on career statistics, play style and performance in previous tournaments.

Your advisor can bring this same approach to help you choose your investment portfolio fund manager. They’ll research how a fund manager operates and what their investment strategy is so you can make selections that are suited for you and your investing goals.

Player form

When you’re evaluating a player for your team, you’ll have to consider their form. You’ll want to choose players who are consistent with an excellent track record.

Your advisor will do the same when considering fund managers. They’ll want managers who consistently manage quality funds and who stick to their investment strategy regardless of market conditions.

Historical performance

The players you’re considering for your fantasy team should be known for performing well and have a record of success on the current course.

Similarly, when your advisor is helping you build your portfolio, they’ll take the past performance of particular investment types into account. Do these investments have a track record of success given your current investment goals? Your advisor will do their best to set you up for success by taking a look at the historical data of the funds to see if they’re well established and have performed well in similar markets1.

Team diversity

Having player diversity on your fantasy team is just as important as having diversity in your portfolio. Diversifying your investments can reduce risk and help protect your portfolio throughout the downswings of the market.

Game time

When it comes to game time, keep in mind that one round doesn’t mean everything. In your investment portfolio, the same is true: If the market gets rocky, a good advisor should counsel you to avoid making rash investment decisions based on emotion. An advisor can help you stay on track and maintain a long-term focus that takes into account your investment goals.

Your advisor will monitor the performance of your portfolio and help you make appropriate adjustments when your goals or plans change. Careful planning and execution can drive you to the win, both in your fantasy league and in your investment portfolio.

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1Please note that unit values and investment returns will fluctuate and past performance is not necessarily indicative of future performance.

In Quebec, advisor refers to a financial security advisor for individual insurance and segregated fund policies; and to a group insurance/annuity plans advisor for group products.

The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.