Can fantasy football make you a better investor?
the main points
- Choosing your investment portfolio is like crafting fantasy football players.
- You want to do your research and have a plan before you draft, just like when you’re choosing your investments.
- Just as you can’t win with just one high performing player, you want a diversified portfolio.
I’m a huge fan of fantasy football, which is close to $9 billion a year and 40 million Americans play every year! After you join a league, you draft real NFL players for your team, then use their in-game stats to compete online against other people in your league.
Each week, you set your lineup and score points based on the actual performance of the players. Just like investing, getting started is easy, but long-term success It’s hard to master. Although many people play for fun, the skills you learn can actually help you become a better investor. How? Here are some principles that can help you build a first-class team and investment portfolio!
Know your plan
Don’t get into a draft without a plan. Whether it is about picking certain positions first or certain players regardless of position, you need a clear idea of what you want to achieve. Managing your money and investments is the same. You want to write a file financial goals And know what you want to achieve.
Past performance does not guarantee future performance
Conducting research is an important component of selecting the right players and maximizing the talent on your roster. This is the same Investment Choice. Just because a player or investment has performed well in the past does not guarantee success in the future. The player could be injured, the company might have to withdraw products, or the stock’s performance could be a short-term stroke of luck.
Robert Griffin III (known as RG3) was the 2011 Heisman Prize winner and the second overall in the 2012 draft by Washington. He set records for highest pass rating by Rookie Midfielder (102.4) and highest touchdown-to-intercept ratio (4:1), becoming Rookie of the Year. But after a horrific injury, he was unable to regain his strength. He was one of the few players who was highly valued in getting into drafts and ultimately yielded very little to owners. So what is the best way to hedge this problem?
Diversity is the key
You can’t win with just one high performing player. You also don’t want players who score a bunch of points in one week and nothing the next.
The best strategy is to have reliable key players and a few supporting players who are high risk but high reward and have the ability to do well. A large investment portfolio also contains different investments that play different roles. You don’t want all your eggs in one basket. This way you can increase your returns and reduce your risks.
Knock out the losers and let the winners run
When one of your players is constantly underperforming or getting injured, you don’t keep them in the lineup hoping they will improve. You can make a deal or quickly find a player who can replace him. For players who do well, you don’t put them on the bench; You let them lose to collect points.
Your investments are the same. It’s not uncommon for investors to hold losing stocks, hoping for a turnaround, only to see them drop further. you want to Cut your losses Go ahead and don’t sell out the winners too soon.
Check your emotions at the door
I have been a huge fan of the 49ers since I was young and have a huge emotional attachment to them. I tend to overestimate the players from the 49ers hoping they’d do well, but they were just disappointed. exactly like Stock selectionYou want to look at players based on their perceived value, not sentimental value.
Also, watching the ups and downs of a lot of fantasy football can drive you crazy, and the same goes for investing as well. Just because Tom Brady is having a bad week doesn’t mean you should get rid of him because he’s been good for so long. It’s about winning the entire season, not just one match. Investment is the same, look at The Big Picture!
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