It's Super Bowl time again. And whether you're a sports fan or not, you can probably learn something from the Super Bowl teams that you can apply to other endeavors — such as investing.
What might these lessons be? Take a look:
Pick players carefully. Super Bowl teams don't usually get there out of luck; they've made it in part because they have carefully chosen their players. And to potentially achieve success as an investor, you, too, need carefully chosen "players" — investments that are chosen for your individual situation.
Choose a diversified mix of players. Not only do Super Bowl teams have good players, but they have good ones at many different positions — and these players tend to play well together. As an investor, you should own a variety of investments with different capabilities — such as stocks for growth and bonds for income — and your various investments should complement, rather than duplicate, one another. Strive to build a diversified portfolio containing investments appropriate for your situation, such as stocks, bonds, government securities, certificates of deposit (CDs) and other vehicles. Diversifying your holdings may help reduce the effects of market volatility. (Keep in mind, though, that diversification, by itself, can't guarantee a profit or protect against loss.)
Follow a "game plan." Super Bowl teams are skilled at creating game plans designed to maximize their own strengths and exploit their opponents' weaknesses. When you invest, you also can benefit from a game plan — a strategy to help you work toward your goals. This strategy may incorporate several elements, such as taking full advantage of your Individual Retirement Account (IRA) and your 401(k) or other employer-sponsored retirement plan, pursuing new investment opportunities as they arise and reviewing your portfolio regularly to make sure it's still appropriate for your needs.