Are you a home run hitter?

Bill Parrott |

Few events in sports are more exciting than the home run. Kirk Gibson's spectacular home run to beat the Oakland A's in game 1 of the 1988 World Series is my all-time favorite. Carlton Fisk's energetic home run in the 1975 World Series against the Cincinnati Reds was incredible. Aaron Boone's home run against the Boston Red Sox that sent the Yankees to the 2003 World Series was spectacular.  

Do you need to hit a home run every time you invest? Is it necessary to swing for the fence on each purchase? It would be nice to hit four-baggers consistently, but it's not required for you to achieve financial success.

Tony Gwynn was one of my all-time favorite baseball players, a legendary hitter who played his entire career for the San Diego Padres. He finished his remarkable career with a .338 batting average and 3,141 hits which put him in the baseball Hall of Fame. He was not known, however, for hitting home runs.   During his twenty-year career, he only hit 135 home runs.  By comparison, Hank Aaron hammered 755 home runs, and Babe Ruth swatted 714. Tony Gwynn made a career of hitting singles and doubles.

How can you employ an investment strategy of hitting singles and doubles? A time-tested method is to invest in a diversified portfolio of low-cost mutual funds or ETFs. A balanced account of 60% stocks and 40% bonds distributed across several funds is up 19.65% over the past year, and since 1971 it has averaged 10.37%.[1]  The funds in the portfolio performed well, but none of them had eye-popping returns. However, as a team, they produced exceptional results.

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The winning formula for financial success is systematic investing, keeping your costs low, diversifying your assets, and thinking long-term. If you follow this simple model, you'll hit a home run!

"I'm a chemistry guy. I believe you've got to play together to have a chance to win." ~ Tony Gwynn

October 21, 2021

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 the level of your assets.

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.





[1] Dimensional Fund Advisors