Why you need to treat your portfolio like a FIFA World Cup team

Portfolios and soccer teams are quite alike.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The FIFA World Cup is now in full swing, sadly the Socceroos were undone by a poor decision and lost.

I am obsessed with shares, so I couldn't help thinking about comparisons between how a good soccer team and a good portfolio have similarities.

You should only have your best share ideas in your portfolio like Altium Limited (ASX: ALU) and REA Group Limited (ASX: REA), just like countries should only take their best players. There's no point including your 75th best share idea or player into the group.

Next, you want your best players to have more of the ball because they have the best chance of scoring. There's a reason why Cristiano Ronaldo gets a lot of Portugal's possession – he is the best player! You need to allocate more of your portfolio to your best ideas and your less-good ideas should be smaller positions. That's why Challenger Ltd (ASX: CGF) is one of my biggest positions.

It's also a good idea to mix up your portfolio by having shares spread across different industries. Having most of your portfolio devoted to bank shares like Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) means all of your portfolio has the same risks. In soccer it's a good idea to have players with different specialties and different heights – if all your players are around five foot then taller teams can just kick it high into the air.

Foolish takeaway

It's impossible to know which team or which share will do best, but if you pick a group of quality choices then you're more likely to be a winner than a loser.

Motley Fool contributor Tristan Harrison owns shares of Altium and Challenger Limited. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »