Imagine you’re sitting in a modest rowboat on the surface of Platte Lake with your fishing gear and a coffee thermos. You’re noticing the ripples of the water and the gentle sounds of creatures waking up. You’re quietly waiting for a bass to tug on your line. As the sun pushes up in the east and the weather slightly warms, your thoughts are squarely focused on…wealth management?
To be honest, that’s not entirely crazy. There are plenty of parallels between freshwater fishing and modern wealth management. From time to time, I’ve dwelled on some of the ways fishing has taught me to approach finances. I’ve observed three similarities between fishing and investing that I’d like to share with you today.
Patience Is More Than a Virtue: It’s a Plan
Any Michigan resident who fishes regularly has experienced at least one day on the lake when the fish simply didn’t bite. Sometimes they finish the day with nothing to show after changing spots multiple times. Other times, after hours of frustration, they finally get a bite, only to lose the fish by over-tugging the line too impatiently.
We see novice investors take this approach to their stock portfolios at times. The slowness of the market gives some unseasoned investors itchy fingers; they panic-sell shares of underperforming stocks and chase down hot stock tips that have already peaked.
Time is your friend, especially with long-term investments like retirement funds. The average annual return on the S&P 500 index since 1957 is 10.3% (before adjusting for inflation).
If you have a stock that’s only marginally in the red on recent returns, don’t give up on it for that reason alone. Patience in wealth management pays off—either in value growth or the rational decision to sell.
Diversify Your Spots (and Your Stocks)
There are over 10,000 lakes in Michigan. They come in all different sizes. Inland lakes like Platte Lake contain a lot of warm-weather species and are great for casting from boats or docks. Larger lakes like Torch Lake have a wider variety of species and depths, demanding more specialized fishing equipment, lures, and techniques.
Smart anglers know that every lake has potential, and it’s good to switch up from time to time. Similarly, experienced investors know that portfolio diversification is a big key to success. Allocating your assets among different classes, sectors, market caps, and locations is a way to mitigate risk.
Just as one of your favorite fishing spots dries up or gets crowded, another one nearby might be teeming with fish. With wealth management, when one of your asset classes is in a downturn, another that’s going through a boom can offset your losses.
Casting a Line in Different Seasons
Michigan is famous for its wildly extreme fishing seasons. In summer, we fish for bass on the water in the sun. During winter, those in the northern part of the state (especially the Upper Peninsula) turn to ice fishing for bluegill, walleye, and other species. Each season calls for its own set of equipment and techniques on the water.
Life has seasons of its own, and your financial needs change accordingly. What you need while raising a family or saving for college is different from what you need in retirement. Your strategies and resources also change.
It’s best to have a diverse financial “tackle box” with several vehicles: investments, insurance, emergency savings, retirement funds, and so forth. You can deploy different strategies throughout your life to maximize your investments at given points.
Wealth Management Support in Rough Financial Waters
Even the most skilled professional fishers need guidance from others every once in a while, so there’s no shame in a beginner asking for help. It’s exactly the same with wealth management. Everyone can use a hand from time to time.
The Valletta Group can be the calm beneath the surface of your financial lake. Investors of all experience levels contact us to get the most out of their investments—and that’s no fish tale.
To schedule a meeting, call (248) 720-1780 or email mswiecki@vallettagroup.com.
