Wednesday, February 26, 2014
A game for thinkers
Personal finance, like chess, is a game for thinkers
THE SAVINGS GAME
Susan Polgar is passionate about the topic. ''If women put their minds to it, there is no reason they can't be as good as the men,'' the 36-year-old mother of two says, with a conviction born of her own achievements. ''It is primarily a historical, social problem. I do believe women who really want to make it can make it.''
Polgar is not talking about women in business, although she has become a successful entrepreneur in her own right. She is not talking about women and personal finance, although societal issues (for years, handling the finances was viewed as the ''man's job'') conspire to set women back.
For now Polgar is talking only about a game, one in which she has set numerous world records, including one in which I was a part.
But this column is about more than a game. The qualities that Polgar's favorite game nurtures are the same that make for financial and personal success, as I will show you shortly.
Susan Polgar, for those who don't recognize the name, is the oldest among three child-prodigy Hungarian chess-playing sisters, the undefeated winner with 10 straight victories (at age 4!) of the 11-and-under Budapest girls' championship.
Polgar is also a four-time women's world chess champion and the first woman to earn the men's grandmaster title in what is still, at top levels, a gender-divided game. A resident of the United States since 1994, she runs a seven-day-a-week chess center in New York and founded a not-for-profit foundation to promote chess among children, especially girls.
Now, in an event designed to raise funds for the foundation, Polgar was trying to set a Guinness World Record by playing more than 321 chess games at once. To be eligible for the record, she had to score at least 80 percent.
No problem. America's chess queen scored 97 percent, winning 309 of the 326 official simultaneous games (I was one of her victims), drawing 14 and losing just three in a record-shattering performance that began about 10:30 a.m. Aug. 1 and ended at 3 a.m. Aug. 2 at the Gardens Mall in Palm Beach Gardens.
Counting other games, Polgar ended up playing 1,131 consecutive games, winning 1,112 wins, drawing 16 and losing three, all records as well, while walking the equivalent of more than 9.1 miles from chessboard to chessboard at the mall and taking only five breaks of five minutes each.
Why put herself through that, I asked her?
''I have gotten a lot from chess,'' she said. ''I think it is my obligation to give back to the game and to show the way for the next generation, especially girls.''
What is so special about chess?
''I think chess is really the perfect game because it teaches so many important life qualities, like focusing and logical thinking, and being responsible for your actions. . . . If you don't pay attention, you get checkmated. Chess teaches you to plan ahead, not just do the first thing that comes to your mind.''
The more I thought about her comments, the more sense they made. As an avid chess player, I've come up with the following parallels:
* To win at chess, you cannot make moves without a purpose. You need a plan that often includes short-term or medium-term goals (such as increasing the mobility of your pieces, or controlling a key area of the chessboard). Similarly, in personal finance it makes no sense to make investments at random (such as just because a magazine touted a hot stock or mutual fund) without well-defined short-, intermediate- and long-term goals.
* Most moves in chess involve trade-offs, and you must consider the good and bad. A move that strengthens your position in one area may create a weakness somewhere else. The same is true with finances. Investments with higher potential returns, for example, typically pose a higher risk of loss and/or offer limited liquidity.
* In chess, you generally can't win by attacking with just one piece. With investments, you need different asset classes working together in a diversified portfolio, not just one type of asset (as investors who piled into technology stocks discovered in 2000).
* In chess, you must defend as well as attack - your opponent is trying to checkmate you, too. In financial planning, you must have your defenses in order, including an emergency reserve and adequate insurance, before you invest.