I played a lot of sports when I was growing up.
By a lot, I mean I was on two basketball teams and two soccer teams at any given point in time.
I loved to do this and my parents liked me doing this because I was a very energetic kid.
The only way I could keep myself out of trouble is if I had a good outlet to burn off some of that excess energy.
I was fortunate to have many great coaches throughout my lifetime.
One of those coaches was my 8th grade AAU coach, Coach Doran, whose favorite line to use when talking to our team in the huddle was “this game is chess, not checkers.”
At the time I really didn’t think too much about it, but today, that saying is ingrained in my mind.
Because in order to win in life you need to understand if you are a checker player or a chess player.
Of course, I don’t mean this literally, but metaphorically.
Both games are great to play and you are not a lesser person if you like checkers more than chess or vice versa.
But knowing your preference will help you understand what you want in your life.
For those that haven’t played either game in a long time here is a quick refresher.
In Checkers, you can only move forward and never move backward.
The person that wins is the person that eliminates all their opponent’s checkers.
In Chess, you can move forward, backward, diagonal, you name it. Each team has 16 pieces with 8 pieces being pawns and 8 pieces being a form of ancient hierarchy.
These respective pieces do not have the same role or capability and they should be used strategically.
The person that wins this game is the person that gets checkmate to the opponent’s King.
Checkers has a clear endpoint as there are only so many moves that can be made to wipe out the other team if you cannot retreat.
Chess can be played for days and can be won in 5 moves or 500 moves.
Dr. Marion Tinsley said it best when describing the difference between Chess and Checkers: “Chess is like looking out across an ocean. Checkers is like looking down a well.”
So where am I going with this?
In investing you can be a Checker player or a Chess player.
There is no right answer.
One might “make” you more than the other, but that same one might require 20x more time for you to effectively operate.
For example, if I am investing in the stock market, I could hire a financial advisor to manage my portfolio.
In theory, this financial advisor will be playing Chess with my funds and trying to get the upper hand vs the market.
Unfortunately, decades of research have shown that roughly 90% of financial advisors don’t outperform the market.
If that is the case you are paying someone else to lose at Chess for you.
But if you chose to play Checkers with your investment then you could simplify your strategy, reduce your fees, and have a higher likelihood of seeing your investments grow.
If you want to do that, then you could put your investments in index funds.
In the example above, it might make more sense for you to personally play Checkers.
Where would it make sense to play Chess with your money?
With Real Estate Investing!
If you want to play Checkers in Real Estate, then go buy a REIT. That will go up and down with your stock portfolio.
Or go buy a single-family home which will be impacted by the sales price of your neighbor’s house next door and the interest rates being offered.
If you want to continually beat the market, then go into Private Real Estate investing.
Fundrise has a really good page that shows all the data on why someone should consider investing in private real estate.
But the watch out in Private Real Estate investing is the same as working with a financial advisor that can beat the market.
You need to do your research and pick a team that has a track record of success and an investment approach that aligns with your preferences.
If you want to see what type of investor you might be, then you can take our quiz.
Heads up, Chess vs Checkers is one of the questions!