The Women’s World Cup and Good Money Management

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The Women’s World Cup is on and the Matildas are playing magnificently! They have already made the final eight, and this weekend they have the chance to push through to the semi-finals.

Whenever there is world class sport going on, we love to identify lessons we can draw on that will inspire better money management. And Australia’s team is giving us some wonderful pointers that we can adapt to ensure our finances perform as strongly as they do. Here’s just a few ‘money management tips’ from the Matildas.

Tip One. Defence is Important

World famous investor Warren Buffett insists that the first rule of becoming wealthy is to not lose money. Well, it seems that the first rule of winning soccer is to not concede goals. To win a game of soccer, you have to score more goals than you concede. To illustrate, think about the fact that, in this World Cup, Australia won their first game even though they only scored one goal, but they lost their second game even though they scored 2 goals. Put simply, the fewer goals you concede, the easier it is to win because you don’t have to score as many goals.

The same goes with investing. If you do not lose any money, then your investments do not need to perform as well for you to make a decent return. Let’s say you have $100,000 to invest. You split your investment into two and invest each half into the shares of a single company.  One of the companies goes bust. Now, in order to just get your original money back, your one remaining investment has to double it’s value! That’s hard.

Compare that to the investor who puts the $100,000 into a diversified investment. Diversification (done properly) radically reduces the impact of any one company going bust and thus it reduces the chances of you losing money. Now, you do not need to pick an investment that will earn 100%. Any positive return, no matter how small, will make you wealthier. And a small return is much easier to achieve than a large one. Not losing money makes it a lot easier to make money.

After four games, Australia has only conceded 3 goals – and all of these were in the same game. If all of the Matilda’s opponents scored three goals a game, they would have lost two of the first three and bombed out of the competition. But because all of their other games have been ‘clean sheets’ for the Aussies, they have been able to win three out of their four games.

Tip Two. It Takes a Team (and a Plan B)

Samantha Kerr was in many ways the face of this World Cup. She is the current (and three-time) winner of the Best International Women’s Soccer Player… in the world!

On the eve of Australia’s first game, she hurt herself at training. She missed all of Australia’s first three games and only came on with 12 minutes to go in game number four, on Monday night this week. No matter. Australia still managed to qualify at the top of it’s group and then beat Denmark 2-0 in the round of 16 match. Both of those goals were scored before Sam came on to the pitch. Indeed, Australia has scored all 9 of it’s goals so far in this World Cup without Sam Kerr being on the pitch. The team is winning – not just it’s champion player.

Money management works best when you have a team around you, as well. Whether that be ‘teammates’ who invest your money, manage your super, or simply advise you if you prefer to DIY, having a band of trusted advisers makes successful money management much more likely.

Tip Three. Time is your friend.

Nothing happens in a rush. In the big game against Denmark on Monday of this week, Australia scored in the 29th and the 70th minutes (of a 90-minute game). That means that Australia was not scoring most of the time. But in the time between goals, the team was working just as hard.

Investment markets are like that. In the financial year that just finished, the ASX 200 earned about 14%. That’s a goal scoring year. But the year before, the market was down around 6% (both figures include dividends). The challenge, of course, is that we never know in advance which will be the goal scoring year. Just like the Matildas can’t tell in advance which forward move will end in a goal – they just need to keep making those forward moves. They know that the game lasts for 90 minutes and a goal scored in the last minute counts just as much as one scored at the very start. The aim is to outlast their opponent – and this dedication to endurance is a great way to make better investments, as well.

Tip Four. Have fun!

Have you seen the smiles on the faces of the Matildas? And their supporters? These players are having the time of their lives!

Now, managing your money will not give you the same rush as scoring a goal in front of 75,000 screaming fans. But there is a definite joy that comes from setting yourself a financial goal and then reaching it.  There is a further joy from knowing that your loved ones are financially secure because of the decisions you have made. That’s why it is always best to approach your finances with enthusiasm and to try to enjoy solving the puzzle of making your money do what you want it to do. Getting it right gives you quite a buzz.

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