March Madness is in full swing, and first-timers from San Diego State, Miami, and Florida Atlantic are joining UCONN in the Final Four. The top seeds have NBA-caliber talent, and several players will be lottery picks in the upcoming draft, so it's not surprising most people picked these schools to win the NCAA Tournament. However, Perennial blue-bloods like Baylor, Duke, UCLA, Kansas, and Kentucky are on the outside looking in, as there is not a single top seed in the Final Four.
According to ESPN's Tournament Challenge, 19% of the people picked Alabama to win this year's tournament, not Florida Atlantic. The tournament started with a bang as sixteen-seed Fairleigh Dickinson University beat one-seed Purdue, and it was only the second time in tournament history that a one-seed lost to a sixteen-seed. In 2018, the University of Maryland Baltimore County destroyed Virginia 74-54. The Fairleigh Dickinson victory busted brackets as 8% of the people picked Purdue to win the tournament, and only .01% chose Fairleigh Dickinson, likely their alumni and students.
Investors constantly hunt for one stock to buy that will propel their portfolio to new heights. In doing so, they ignore the efficiency and power of a diversified portfolio. A balanced portfolio can deliver solid results without relying on a stock. In other words, you don't need a one-seed to win the investment game. Over 20 million people completed a bracket on ESPN. No perfect brackets remain because selecting a winner for each tournament game is impossible, almost as challenging as constructing a portfolio of individual stocks that never fall.
A balanced portfolio of stocks and bonds can produce exceptional returns over time. Vanguard's Balanced fund is a mix of stocks and bonds, and for thirty years, it generated an average annual return of 8%, turning $10,000 into $101,700. This fund has no star power, but it's a steady performer. Low-cost index portfolios shun high-profile money managers but provide shareholders with market-driven returns. They rely on diversification and conservative investment strategies and can reward those who invest for the long term.
In addition to quality players, a winning team needs a good coach, and working with a financial planner who acts as your coach is a wise investment. A Certified Financial Planner Professional™ can help you develop a game-winning strategy based on your hopes and dreams.
As you build your winning team, focus on a diversified portfolio of low-cost index funds and hire a fee-only, fiduciary Certified Financial Planner ®.
Talent wins games, but teamwork and intelligence win championships. ~ Michael Jordan
March 29, 2023
Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM's custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on your asset level.
Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and aren't suitable for every investor. Prices and yields are for today only and are subject to change without notice.