What the world champion Royals can teach us about investing

“The future ain’t what it used to be” – Yogi Berra, New York Yankee legend

Andrew Thomas

Like many kids, I learned from an early age that a game can teach us more about life than most realize. Baseball is adversity. Baseball is success by way of failure. Baseball is discipline and perseverance.

Sounds a lot like life doesn’t it? Or dare I say … investing?

[pullquote]“In 2011, the Royals were dead last in total team payroll at $36.1 million, which was nearly equal to the salary of a single New York Yankee third baseman Alex Rodriquez. And now the Royals are champions of the world!” – Andrew Thomas[/pullquote]

For decades, one of the biggest complaints with Major League Baseball has been the wealth gap between small and big market teams. Teams in bigger markets have more money. More money equals better players. Better players equal more championships. The little guys start every single season at a disadvantage. While that may have been true over the last few decades, times are changing. And it’s no fluke.

In 9 of the last 10 years, at least half of all playoff teams fell in the bottom half of all MLB payrolls. In the 10 years prior, that only happened three times. Both World Series teams have proven that it doesn’t take a fat wallet to have success anymore.

So, what does this have to do with your 401(k) and investing? Well, a ton!

The majority of the financial services industry is designed to benefit those that actually need help the least. Baseball’s lack of a salary cap does the same thing. The Royals’ successful turnaround isn’t just a great underdog story — it also contains a formula to help those that need financial help the most.

Good management and a solid strategy effectively levels the playing field! 2006 began a new era in Royals history. New Royals General Manager Dayton Moore took charge of a team in the midst of its third straight 100-loss season and more than a two-decade playoff drought! The goal: to reach the World Series in 2014.

As we know, that’s exactly what happened — twice — and all while consistently having one of the smallest payrolls in baseball. In fact, in 2011, the Royals were dead last in total team payroll at $36.1 million, which was nearly equal to the salary of a single New York Yankee third baseman, Alex Rodriquez.

And now the Royals are champions of the world!

The bottom line – Dayton Moore rebuilt an organization that was the joke of the league and turned it into a team to be feared. You can do the same with your 401(k). Times are changing. Low-cost index funds are everywhere and technology is making things easier than ever. If you don’t feel comfortable going it alone, find someone that will do it for you.

Let’s Go Royals!

Andrew Thomas is a registered paraplanner and investment advisor at blooom. Andrew has spent more than 5 years offering personalized investment advice to retirement plan participants and helping middle class investors navigate the complex world of personal finance.