I don’t make a lot of changes to my 401(k) account. Heck, I barely touch the thing. That&rsquo...
Lessons Investors and Traders Can Learn from Game of Thrones
09/01/2017 2:57 am EST
A few financial lessons from Game of Thrones that can help you make your private kingdom even more powerful, writes Steve Pomeranz, CFP. Look for guides on how to get started trading or investing every Friday on MoneyShow.com.
Since the dawn of human civilization, the jostling of economic and military power has relentlessly shaped human history, and writers have often dipped into this rich vein of history to build their characters and plot lines.
And so it is with the very popular, award-winning HBO series, Game of Thrones, which offers its own insights into how kingdoms are won and lost. I want to give credit to Michael Estrin, contributing reporter for BankRate.com, who laid out some of the financial lessons from Game of Thrones that I plan to talk about today. But first, let me fill you in on what the series is about.
Game Of Thrones: A brief overview
Game of Thrones is an adaptation of a series of fantasy novels called A Song of Ice and Fire by American novelist George R. R. Martin; the first book in this series is titled A Game of Thrones, which is where the TV series gets its name.
The drama plays out on the fictional continents of Westeros and Essos and the quest for the Iron Throne of the Seven Kingdoms through a web of alliances, deceit, inheritance, and conflict among dynastic noble families vying for the throne or fighting for independence from it. That’s a very brief overview, and if you want to learn more, just google Game of Thrones and you’ll find everything you want and more.
Financial lessons from Game Of Thrones
In the series, money plays a very prominent role in determining the fates of the warring sides; so, in keeping with the theme of this show, let’s talk about a few financial takeaways from Game of Thrones.
“Winter is coming”
“Winter Is Coming”—that’s the ominous title of the very first episode, and those words are uttered by a father in response to a mother worrying that her young son, Bran Stark, had just witnessed an execution. But you immediately know the father is talking less about the weather and more about the hard times ahead and would rather his son be prepared for much worse that’s yet to come.
And so it is with all of us. Sooner or later, we will face the winters of our lives when we get old, and it is best that we prepare ahead and start saving and investing for retirement at the youngest age possible.
As I mentioned in a recent commentary, an alarming number of Americans are ill prepared for retirement; so make sure you’re not one of them when you head into the inevitable winter of your life.
“A Lannister always pays his debts”
Here’s another quote: “A Lannister always pays his debts”. It’s a reference to the House of Lannister, one of the richest and most powerful families in Westeros. And the financial lesson from Game of Thrones on this one is that you’re always better off keeping a lid on your debts, paying them on time, and never taking on more than you can afford.
While some debts—such as a mortgage on an affordable house—can be helpful and even serve a good purpose, most other debts are bad, so stay as debt-free as possible.
“Choose your heirs carefully”
With dynasties jockeying for power, long-term outcomes strongly depend on the lines of succession and the strengths, weaknesses, and follies of heirs. As Game of Thrones fans know all too well, those who wear the crown aren’t always the best candidates for the job, and things can go really badly when you don’t designate responsible heirs ahead of time because death can come anytime in Westeros.
So, our takeaway here is that estate planning is absolutely essential. Studies show that most Americans do not have a will or an estate plan, even though it doesn’t cost a lot to set one up.
So, make sure you have a will and a trust in place—it will give you peace of mind should something happen to you and will cleanly and immediately transfer assets to your heirs, without legal expenses, probate fees, and months gone by before your heirs can touch the assets.
“Be certain your trust is well-placed”
Next, “Be certain your trust is well-placed.” In Game of Thrones, there is a heavy undercurrent of betrayal, and no character—no matter how powerful—is immune to a good double-cross. Fortunately, our world is not so Machiavellian.
For the most part, we have laws and rules in place that protect us and our finances, but even so, stories of financial betrayal abound. In fact, I recently did a piece on Johnny Depp suing his financial management firm after a 17-year financial relationship; so it’s important that you pick financial advisors, accountants, estate planners, and will executors that you can trust.
Remember, if you are on top of your finances, it’s harder for someone else to betray you; and if they still do, you’ll catch them before it’s too late.
“It’s a big world”
Here’s another financial lesson from Game of Thrones. The phrase “It’s a big world” refers to two major threats to the Seven Kingdoms—from white walkers and Targaryen’s dragons—that remain largely unseen by many of the characters in the series who do not realize the potential havoc they can cause.
So it is with external events in the investment world.
While we cannot control a lot of the unknowns, we should stay informed of faraway forces that might impact our lives and wallets, whether it’s a European debt crisis, economic pressure from China, or something else.
Stay abreast of outlier threats to your portfolio and seek shelter if you see a wind blowing that could develop into a storm.
“Women’s work is undervalued”
“Women’s Work is Undervalued.” While women acquire wealth and power in Game of Thrones, respect doesn’t come easily in Westeros, and they’re often mocked, even when their talents are at par with men.
Today, qualified and hard-working women still earn less than men in similar positions. So we should all realize that women are as much a resource as men and treat them fairly—without prejudice—respect them and pay them at par with men.
“You need a disability carrier”
Another financial lesson from Game of Thrones: “You need a disability carrier.” In the series, our young Bran Stark has a steep fall and is unable to walk. From that point on, Bran relies on a slow-witted giant named Hodor to carry him around. In that fictional world, there was no disability insurance, and without Hodor, Bran would have been stuck in one place.
So, while it’s important to have health insurance, it’s also a good idea to have some form of disability insurance. According to the Insurance Information Institute, about half of all large and midsize U.S. employers offer some form of long-term disability coverage, so check what your employer covers. And if you feel the coverage won’t be enough, consider buying private disability insurance, especially if you are the sole earner in your family.
There are still more financial lessons from Game of Thrones.
For example, Westeros does not have a single bank, and its kings must borrow from the Iron Bank of Braavos. When princes fail to repay the Iron Bank, new princes spring up from nowhere and take their thrones. Real power lies with the Iron Bank, not with the kingly borrowers.
Real estate is another valuable asset; without land, you are of little consequence in the world of Game of Thrones, and dispassionate kings prevail over those who let emotions get the better of them.So it is with our investments, where dispassionately sticking to a plan works wonders.
There you have it: a few financial lessons from Game of Thrones that can help you make your private kingdom even more powerful.
To find out more, go to www.stevepomeranz.com
Related Articles on STOCKS
Occidental Petroleum (OXY) has been a near-term disappointment, but continues to show long-term prom...
Westwood Holdings Group (WHG) provides investment management services to institutional investors, pr...
Stefanie Kammerman, the Stock Whisperer, to tell you the Whisper of the Week: IAU and GE in my weekl...