What can the world champions of chess teach you about financial planning?

Earlier this month, global chess champions took part in London’s annual ChessFest at Trafalgar Square. Among them was Bodhana Sivanandan, a nine-year-old chess prodigy who has recently been selected to join the England women’s chess team, making her the youngest person to join a full England team in any sport.

There’s no doubt that Sivanandan and her team members possess extraordinary levels of skill; in fact, their approach to the game of chess could also hold valuable lessons when it comes to financial planning.

Read on to discover what the world champions of chess could teach you about achieving your long-term financial goals.

1. Each piece of your financial plan has an important role in enabling you to achieve your goals

On a chess board, you’ll find a range of different pieces, each serving their own purpose in the game. From pawns to knights, to the King and Queen, no two pieces behave in exactly the same way, offering the player a range of options for defeating their opponent.

Similarly, your financial plan will usually be composed of a range of different product types and strategies to help you achieve financial wellbeing. This might include:

• An emergency fund to cover unexpected expenses
• Financial protection to help you pay for essential expenses if you’re unable to earn an income due to illness or injury
• Investments to help you grow your wealth over the long term.

By taking a holistic approach to your financial plan and utilising all the tools available to you, you can feel confident that you’re taking the most sensible steps toward achieving your long-term goals.

2. Each move you make is designed to bring you closer to an end goal

A chess grandmaster will always have a tried and tested plan to win the game against their opponent. Their strategy is usually composed of a series of moves and gambits, each designed to take them closer to that end goal. Nothing is left to chance.

In the same way, your financial plan is composed of a series of decisions and actions, each designed to move you closer to your end goal.

Each time you face a decision, it can help to remember your long-term goals, such as your dream retirement. By making decisions that support you in achieving your long-term goals rather than focusing only on the short-term implications, you can feel confident that you’re continually improving your financial wellbeing.

3. You may need to take some risks along the way

It’s impossible to win a game of chess without taking some risks, albeit risks you have carefully weighed up beforehand. For example, you may need to sacrifice some of your less valuable pieces to protect those that are more likely to help you win the game. While it may feel daunting to take risks like this, ultimately it can help you to achieve your goal.

Taking the right level of risk is also important in your financial plan, and particularly in your investment portfolio. Take too much risk and you could experience losses that hinder your ability to achieve your goals; take too little risk and you may not be able to generate high enough returns to grow your wealth in your desired time frame.

The suitable level of risk for you will depend on a range of factors, including:

• The time frame within which you hope to achieve your goals
• Your current circumstances and your capacity for loss
• Your personal attitude to risk.

Your financial planner can help you to identify the level of risk that might be appropriate for you and your circumstances, and craft a portfolio designed to help grow your wealth and achieve your goals.

4. Patience is key for creating sustainable financial security

A game of chess can be a lengthy affair. The longest game in history is said to have lasted for more than 20 hours. So, as well as skill, chess grandmasters must employ patience and determination if they are to succeed.

Creating long-term financial security can also be a waiting game. It can take years or decades of consistent action to grow your wealth and accumulate the funds needed to achieve your goals for retirement.

In that time, markets can experience volatility, which can be nerve-wracking for investors. But remember that the time horizon of your investments means that short-term fluctuations in value are unlikely to have a lasting impact on your ability to achieve your goals.

Get in touch

I may not be a chess grandmaster, but I can help you build a tax-efficient financial plan that enables you to achieve your goals. Please get in touch to learn more.

Email Marnel.Stafford@fosterdenovo.com or call 07305 970959 or 0207 469 2800 to start the conversation.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.

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