Over the 2023 Easter weekend, Coventry played host to the Matchplay Scrabble tournament, a two-day event sanctioned and rated by the World English Language Scrabble Players Association (WESPA).

On 13 April each year, the UK celebrates National Scrabble Day.

Across the world, Scrabble is taken very seriously. The Coventry event is one of almost 50 WESPA-affiliated competitions that occur each year, from America and Thailand to Sri Lanka and Nigeria.

Scrabble is a game of skill that requires in-depth knowledge, strategy, and sometimes patience. A lot like your investments.

Here are just three lessons the game of Scrabble could teach you.

1. Diversify the board and keep your score moving by switching between long and short words

Where your investment returns are concerned, you’ll no doubt think that bigger is better. This is true, but only within a risk-managed environment.

In Scrabble, it can be tempting to try impressing with the longest (or most obscure) word you can find – hoarding tiles, racking them in order, and awaiting the perfect time to drop them in place.

Dictionary.com suggests that oxyphenbutazone (an anti-inflammatory drug, for those interested) is the longest legal word that would fit onto the standard Scrabble board, potentially for a whopping 1,778 points.

It’s important to remember though, that over the long term, bigger isn’t always better. A series of well-placed short words could reward you with a higher score than a delayed “perfect” long word or one that fails to land on any of the board’s jagged-edged bonus squares.

Employing a mixture of short and long words might work best, and you won’t be able to land on a coveted bonus square every turn.

You’ll need to manage your strategy in the same way that we manage your investment’s asset allocation. Different asset classes carry their own risk and are held in smaller or greater numbers, combining to form the strategy best aligned to your risk profile.

We also employ diversification between sectors and geographical regions, using the individual letter tiles of your investment to form myriad patterns all across the board.

2. Emotional biases could you see you cling to badly performing tiles

In the same way that you need to manage how you play short and long words, you’ll also need to think about the individual letters you hold on to.

It might be worth squirrelling high-scoring tiles (Xs, Qs, and Zs, for example) but only if you know the best words to make use of them.

Holding out for the perfect opportunity to play “axe” or “zoo” might not be worth it in the long run. If you get the opportunity to play “xylyl” (18 points) on the other hand, your strategy might pay off.

You’ll need to think carefully about your attitude to risk and capacity for loss and manage them both carefully. Taking too little risk could mean you miss out on the opportunity for higher returns (whether in pounds or points). Too much risk, though, could mean waiting for the perfect time to play “flybys” (17 points) and then missing it.

Emotional and behavioural biases can play a huge part in how you invest, but understanding the limits of your knowledge, your attitude to risk, and your capacity for loss can all help you weigh up the risk versus reward in a way that works for you.

3. Focusing on your own game

One of the key investment biases (arguably becoming more widespread as so-called experts offer investment “advice” via social media) is herd mentality or trend-chasing bias.

You might think that there is safety in numbers, but this rarely applies where your investments are concerned. 

The Scrabble tiles on your rack are yours to play with. And while the choices your opponent makes will influence how you respond, unless you are a veteran of the WESPA tournament circuit there’s little point trying to pre-empt their next move. 

It’s more important to focus on your own game, planning ahead while understanding the need for contingencies against unexpected shocks.

The same is true of your long-term investments and the whole of your financial planning.

TikTok “experts” promoting the latest investment trend know nothing about your long-term goals or your risk profile. You’ll likely find that your colleagues and friends don’t either. 

A successful investment (like a successful game of Scrabble) is about managing the risk you take so that you can reach your goal within your chosen time period. Sometimes that will require patience, as well as blocking out the noise of external voices.

Get in touch

We might not be World Scrabble Champions, but with decades of experience in financial services, our Chartered Financial Planners have the expertise to help you plan for your future, your way. If you have any questions, please get in touch and speak to us today.

Please note

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.