The Savings Game Posted by Picasa
July 27, 2005

Chess offers lessons for financial portfolios

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 borne 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 on her own right. She is not talking about women and personal finance, although societal issues (for years handling the finances was viewed as the “men’s job”) conspire to set women back.

For now Polgar is talking only about a game, one in which she has set world records and is about to try for a new one in South Florida.

But this column is about more than a game. The qualities that Polgar’s favorite game nurture are the same that make for financial success and success in life, 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 is the top-ranked American woman player and current holder of a Joe DiMaggio-like streak of 56 consecutive games without a loss at Chess Olympics events.

I was talking to Polgar not about financial issues but about her attempt to set a Guinness World Record by playing more than 321 chess games at once (to be eligible for the record, she will have to win at least 80 percent). She’ll try it Monday, taking on amateur challengers including children at the Gardens Mall at 3101 PGA Blvd. in Palm Beach Gardens (for more information, including how to register to play, go to the Web site

The event will raise funds for the not-for-profit Susan Polgar Foundation, which promotes chess among children worldwide, with a focus on girls.”I have gotten a lot from chess,” Polgar said in a telephone interview from Forest Hills, N.Y, where she runs a chess center seven days a week for players of all ages, from children to senior citizens.

“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,” she said. “It 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 since the age of 10 (obviously nowhere near Polgar’s level, but you don’t have to be to appreciate it), I’ve come up with the following parallels.

Whether you play chess or any game, I believe these observations will be helpful: To win at chess, you cannot make moves at random or 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 tradeoffs, and you must consider the good and the bad. A move that strengthens your position in one area may create a weakness somewhere else. The same is true with investments. 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.

Humberto Cruz can be reached at or c/o Tribune Media Services, 2225 Kenmore Ave., Buffalo, NY 14207. Personal replies are not possible.,1,713321,print.column?coll=la-utilities-business-money

Chess Daily News from Susan Polgar