How Fantasy Football Is Like Managing Your Money

A family of four is sitting on the couch cheering on a soccer game.

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Can Fantasy Football Make You a Better Investor?

Important points

  • Choosing your investment portfolio is similar to designing your fantasy football players.
  • You want to do research and have a plan before designing, just like when choosing your investments.
  • Just like you can’t win with just one powerful player, you want a diversified portfolio.

I’m a huge fan of fantasy football which brings in nearly $9 billion in annual business with nearly 40 million Americans playing each year! After joining a league, draft real NFL players for your team and then use their in-game stats to compete online against the other people in your league.

Each week you set your lineup and score points based on how players actually perform. Just like investing, getting started is easy, but long-term success is much more difficult to master. Although many people gamble for entertainment, the skills you learn can help you become a better investor. As? Here are a few principles that can help you build a world-class team and investment portfolio!

know your plan

You don’t go into a draft without a plan. Whether it’s picking certain positions first or picking certain players regardless of position, you need to have a clear idea of ​​what you’re trying to achieve. Managing your money and your investments is the same. You want to clearly write down your financial goals and know what you want to achieve.

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Past performance does not guarantee future performance

Your research is an important part of picking the right players and maximizing the talent in your roster. This is the same as choosing an investment. Just because the player or investment has done well in the past does not guarantee future success. A player may be injured, a company may have to recall products, or a stock’s performance may be a short-term fluke.

Robert Griffin III (known as RG3) was the 2011 Heisman Trophy winner and the second overall pick in Washington’s 2012 draft. He set records for the highest passer rating by a rookie quarterback (102.4) and highest touchdown-to-interception ratio (4:1), and was named NFL Rookie of the Year. But after a gruesome injury, he was never able to regain his form. He was one of the few players so highly rated in drafts and ultimately producing so little for owners. So what is the best way to hedge against this problem?

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Diversification is key

You can’t win with just one powerful player. They also don’t want players who score a lot of points one week and none the next.

The best strategy is to have regular players who are reliable and a few supporting players who are high risk but high reward and have the potential to do well. A great investment portfolio also has different investments that play different roles. You don’t want to put all your eggs in one basket. This is how you maximize your returns and minimize your risks.

Cut off your losers and let your winners run

If one of your players is consistently underperforming or getting injured, don’t keep them in your lineup hoping they’ll get better. You make a trade or find a player who can quickly replace him. You don’t bench them for your good-playing players; You release them to earn points.

Your investments are the same. It’s not uncommon for investors to hold onto losing stocks and hope for a turnaround, only to see them fall even further. You want to cut your losses and move on and not sell your winners too soon.

Check your emotions at the door

I’ve been a huge fan of the 49ers since I was young and have a great emotional connection to them. I tend to overestimate 49ers in hopes they will do well, only to be disappointed. Just like when picking a stock, you should look at players for their perceived worth, not their emotional worth.

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Also, watching the ups and downs of too much fantasy football can drive you crazy, the same goes for investing. Just because Tom Brady had a bad week doesn’t mean you should dump him since he’s been good for so long. It’s about winning the whole season, not just one game. Investing is the same, look at the big picture!

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