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How Chess Can Help You Work Toward Becoming a Grandmaster of Investing

In a single game of chess, there are approximately 400 possible moves after each move played. When investing, there is also a seemingly endless selection of choices and critical decisions. The basics of chess could potentially help you become a more adept investor. There are risks involved in investing; however, having a strategy that considers your risk tolerance can help mitigate unforeseen changes in the market from adversely impacting you over the long term. Here are six fundamentals of chess that you can apply to your investment strategy.

Understand the game before you start playing

Just like in chess, before you begin investing in a company or investing in general, it is essential to do your research. You should learn investing basics and research companies before you start, especially if you are a beginner. Doing so can help mitigate some of the risks involved. Chess players and investors both know you can never be entirely risk-free. However, with knowledge and the guidance of a professional, you can work toward preserving your chessboard and wealth, even in a down market.

You have to think a few moves ahead

As in chess, investing requires a certain amount of strategy and understanding the repercussions of a move you make three or four moves down the line. Learning how to do this requires a comprehension of the fundamentals. The hardest part about investing is that you cannot predict how the market will fluctuate. However, it is possible to recognize a healthy company from one that is potentially struggling or being mismanaged by doing your research and consulting a financial professional who has investment and wealth preservation experience.

Finding the strategy that works for you

Not everybody invests the same way, just like not everybody plays chess the same way. Everyone has a different risk tolerance and their own strategy. Knowing what works for you and being consistent can be a beneficial approach to a long-term strategy.

Being willing to be flexible

When you are playing chess or investing, sometimes the chessboard or the financial environment can change and force you to rethink your strategy or make decisions you may not have considered making. Flexibility and adapting to changing conditions can help preserve your wealth, like winning after a long chess match.

Understanding the value of patience

Patience when investing involves taking a long-term commitment to your strategy, being confident in both your decision-making, and believing that the market will be able to correct itself should it temporarily go down.

Getting help from a professional

Consider consulting a financial professional who can help guide you as you make decisions that align with your financial goals, similar to learning the basics of chess from a chess master.

Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by LPL Marketing Solutions


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