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Commentary: What baseball can teach you about financial planning

Our national pastime, baseball, is ingrained in our culture extending beyond just watching the games and cheering for your favorite team (we'll avoid dwelling on the Twins' struggles in this column). Baseball is a sport that is prone to teaching ...

Bruce Helmer and Peg Webb, financial advisers at Wealth Enhancement Group and co-hosts of “Your Money” on KLKS 100.1 FM on Sunday mornings.
Bruce Helmer and Peg Webb, financial advisers at Wealth Enhancement Group and co-hosts of “Your Money” on KLKS 100.1 FM on Sunday mornings.

Our national pastime, baseball, is ingrained in our culture extending beyond just watching the games and cheering for your favorite team (we'll avoid dwelling on the Twins' struggles in this column). Baseball is a sport that is prone to teaching life lessons to players and fans alike.

With Major League Baseball's All-Star Game still fresh in our minds, we thought this was a great time to discuss the lessons that baseball can teach you about financial planning.

Build a Balanced Lineup

A successful lineup likely won't consist of nine players who all do the same thing. You need contact hitters, power hitters, base stealers and defensive standouts. In other words, you're building a diverse lineup that allows the strengths of one player to counter the weaknesses of another.

We're firm believers that a diverse lineup is the best way to construct your investment lineup, too. Equities lay the groundwork for long-term growth within your portfolio. Fixed income investments tend to provide a hedge against more volatile equities. Commodities help protect you if there's a spike in inflation. Real estate gives you an additional investment path that tends to have low correlation with the stock market.

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All of these different investments work together as one within your portfolio to try to increase your returns while helping limit your risk.

Be Ready for Curveballs

If a hitter knew with 100 percent certainty the pitcher was going to throw a mid-90s fastball for a strike, there's a high likelihood that, at the very least, the batter would be able to make solid contact.

Now imagine that hitter, fully anticipating a fastball, is instead greeted with a curveball in the low-70s. The end result is probably not going to bode well for the hitter because he wasn't prepared for an unexpected result.

When we prepare financial plans for our clients, we hope for the best, but we also implement measures to better prepare them for the worst. This means we keep their short-term money in safer investments to better help them during a market correction. We help them engage in long-term care planning so that their wealth can eventually be passed on to their loved ones, not paid to a long-term care facility. We help our clients review their insurance coverage in the event there's a significant disability, death in the family or natural disaster.

No matter what the risks are that you may face, make sure your financial plan is equipped to deal with those curve balls that you are sure to experience.

Retool Regularly

Whether it's a day at the batting cage, offseason workouts or Spring Training, baseball players are consistently trying to plug the holes in their game and come back the next day better than they were yesterday.

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While there's no offseason when it comes to financial planning, there are ample opportunities to evaluate your plan and identify any weaknesses that could be strengthened.

Have your goals changed? Then it may be time to review your asset allocation and estate plan. Have you been ignoring your 401(K)? You may need to rebalance. Did your portfolio have a bad year? You may want to do some tax loss harvesting. All of these strategies require you to diligently review your financial plan on a regular basis.

There will be strikeouts and there will be home runs when it comes to personal finance.

The key is to not become too despondent or too elated by what happens during a given year. Instead, stick with your plan to better ensure you'll come out on top.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investing involves risk, including loss of principal.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

Bruce Helmer and Peg Webb, are financial advisers at Wealth Enhancement Group and co-hosts of "Your Money" on KLKS 100.1 FM on Sunday mornings. Email Bruce and Peg at yourmoney@wealthenhancement.com . Securities offered through LPL Financial, member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, LLC, a registered investment adviser. Wealth Enhancement Group and Wealth Enhancement Advisory Services are separate entities from LPL Financial.

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