In August I set up my first fantasy football team. A quick Twitter plea for help got me sorted with the basics and I was ready to join my boyfriend’s league. One month on and I’m not in last place – I’m taking that as a victory! More importantly, I’ve also realised there are some distinct parallels between fantasy football, the stock market and investing.
Investing often seems complicated, which puts many people off. However, a lot of people do things everyday that are very similar in many ways. By drawing on the similarities between investing, the stock market and fantasy football, I hope to make investing seem less scary and more accessible.
As always, the content of this post does not constitute financial advice. Speak to a qualified adviser if you are thinking about making a financial decision or change.
The 5 fantasy football lessons this post will discuss are:
- The importance of diversification
- Don’t try and time the market
- Make sure you have an emergency fund
- Don’t forget about the dividends
- Planning ahead
The importance of diversification
Diversification is one of the most important lessons of investing. You shouldn’t put all your money into one company or fund. If something went wrong, you’d be in trouble!
Fantasy football demonstrates this perfectly. If you spend the majority of your “money” on strikers, for example, you may get a lot of points from them. But, your midfields and defenders will likely not be doing well at all.
This means your total score will likely be lower than if you created a more balanced team, with strong players spread across all the positions.
You also want to try and diversify across teams. If you have two defenders from the same team and they lose, then you’ll get very few points. If they’re from different teams and one keeps a clean sheet, you’ll pick up more points.
Unlike on Love Island, in investing and fantasy football putting all your eggs in one basket is not a good idea.
Don’t try and time the market
Players prices move up and down throughout the week depending on how many people are transferring them in and out of their team. As far as I can tell, there’s no set time they change the prices. It’s all random.
Some people claim they can “time the market” and pick players just before their price increases. Some people can. But, for novices – and the majority of people I’m sure – like me, there is no point trying.
This is the same with investing. Day traders and certain investors will claim they can time the market. Most of the time, this simply isn’t true.
Focus on time in the market rather than timing the market. This way you’ll see longer term results. It also takes a lot of the stress out of investing as you can relax when the market moves knowing your money is going to be held for a long time.
Make sure you have an emergency fund
Emergency fund is probably one of my most used phrases on this blog. It’s one of the most important financial things to have.
In fantasy football terms, your emergency fund is your bench. Don’t get caught out like I did last week. I ended up essentially playing with 8.5 players – not my finest hour!
You need to make sure you’ve got solid players on the bench that can come on if someone gets injured or doesn’t play one game.
In financial terms, an injury is the equivalent of an unexpected bill or expense. You need to have easily accessible money to be able to pay these expenses when they occur.
Don’t forget about the dividends
My boyfriend tells me this link is slightly tenuous, but hear me out because I think it works.
We spend a lot of time talking about returns when investing. Returns are very important in investing – it’s the bread and butter of your income.
Don’t forget about dividends in the process, though. Dividends can provide a lucrative source of added income on top of your investment returns. Not all companies pay dividends, so it is worth checking before you invest if you want to benefit from them.
The link to fantasy football?
In fantasy football certain players get bonus points each week. With a maximum of three points per player, these are unlikely to make up the majority of your total score. But, they are a welcome addition and can move you a couple of places up the leader board.
Bonus points are given to the top 3 players from each match. In a way, they’re very similar to a dividend. Just as top performing companies pay out a small some to their investors, the top players reward those that have picked them with extra points.
Another key lesson is about being organised and planning ahead.
Fantasy football sets deadlines each week, by which time you have to have made your changes. If you haven’t, you lose the opportunity to change your squad. This could mean missing out on big points.
If you forget about the deadline until the last minute, you are also more likely to make a panicked decision, which under normal circumstances you wouldn’t make.
In fantasy football, the penalty is losing a few points. In investing terms, your penalty could be losing out on significant sums or even incurring a large tax charge.
Finances are all about being organised and prepared. Knowing when the tax year ends, when your direct debits leave your account, and how much you’re spending are all basic things that you should aim to keep track of with your money.
This way, you’ll be aware of what is going on and able to react to any situations that may occur without needing to panic. What’s better than stress free money?
If you enjoyed this post about fantasy football, the stock market and investing, then please like and share it across social media or with your friends! I’d also love to hear your thoughts and experiences. Have you ever tried fantasy football? Can you think of any investing lessons fantasy football can teach us? Please do share your thoughts below.
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