As I sat at the Gordon versus Parramatta rugby game on the weekend, I began to muse on what rugby could teach me about finance. Here are my 5 lessons from the rugby field.
1. You need good defence.
The Fullback stands several metres behind the back line, fielding any opposition kicks and is the last line of defence should an opponent break through the back line. He needs to have dependable catching skills and a good kicking game. Life risk insurance is your Fullback. It is there as the last line of defence, providing you with money when you most need it – when ill health prevents you from generating an income or when your family is left without the breadwinner.
2. You need diversity.
A rugby team comprises men of all shapes and sizes. It is one of the few games where your physicality can be accommodated. From the lithe and speedy wingers to the big and bulky front rowers, anyone can play the game. In finance, this is represented by having a diverse portfolio of investments. Across and within asset sectors, the lithe and speedy small fund managers who can quickly and easily sell out or buy into stock positions to the boys at the big end of town, robust and powerful taking large positions in big companies, to the strong defence of corporate and government bonds providing stability and surety, a well diversified portfolio plays with assets of all shapes and sizes.
3. You need quality advice.
Sit in any grandstand and you'll hear people waxing lyrical about how the game should be played. Passionate supporters will colourfully shout out what they think from the sidelines. This is like taking advice from your best mate at the backyard BBQ. Instead, a great rugby team owes much of its success to good coaching just as financial success is achieved with good guidance from a qualified financial planner. Studies show that those people who receive financial advice are more likely to have significant increase in savings and debt reduction.*
4. You need to be in it to win it.
You need to be in the game to score the tries. If you are in the game for the long-term, cashing out of the markets when they become rocky will certainly put you out of the game. It is hard to time markets and the greatest growth is generally achieved shortly after the bottom of a cycle. Sitting on the sidelines in cash while the markets go up and down is like being a spectator to the game of rugby, you'll enjoy the show but you won't have any part in the result.
5. A loss in one game might not lose you the season.
Every week the players turn up with the belief and attitude that they will win. But for every winner there is a loser. Just because you might not win one game doesn’t mean you then chuck in the towel and give up for the rest of the season. Watching your investments go down in one period doesn’t mean they’ll continue to go down forever. It’s important to keep your eye on the prize and take a long-term view to achieve financial success.

*$file/rep224.pdf, pg 49, AXA UK PLC, AXA Avenue Fourth Quarter Review: Learnings and Recommendations, January 2007.