You Only Get a Mulligan in Golf

This article is original content written by Manchester, CT Financial Advisor Thomas Scanlon, CFP®, CPA

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In golf the low scores wins. The player with the least strokes per round is the winner. If you hit a bad shot into the woods or the water hazards (ponds) you can get what is called a Mulligan. You can take a second shot and not have a penalty. According to the rules of golf, however, a Mulligan is not allowed. In reality, if the others in your group agree, you only get one Mulligan per round of golf. Essentially, a Mulligan is a free do-over.

There is no Mulligan with your financial planning. There is no do-over. How can you avoid wishing you had a financial planning Mulligan? Here are some instances where investors are looking for that proverbial Mulligan.

Chasing the Hot Investments

Chasing the hot investments is as old as dirt. A particular industry gets hot and some companies within that industry are on fire. This naturally attracts more investment capital. The financial returns then attract more media attention which, you guessed it, attracts even more investors. This was particularly highlighted in the technology field leading up to the year 2000. Go into the barbershop and CNBC was blaring on the TV. Try to get your car fixed and the auto repairman was spending more time following his tech stocks online than he was with his head under the hood of your car. Head out to the neighborhood cocktail party on Friday evening and the conversation was all about the big winners in technology stocks your neighbors had in their investment portfolio. It’s odd how they never had any losers, or if they did, its funny they never mentioned them. The technology heavy NASDAQ closed at an all-time high on March 10, 2000 at 5,048. After the year 2000 do you think any of these folks were looking for a Mulligan? Oh yeah, big time. Did they get it? No, not so much. The NASDAQ closed on April 17, 2015 at 4,931. That’s fifteen long years to get back to the prior all-time high. Remember…there are no do-overs with investing.

Investing too much into one Company

This can easily happen to folks that work for very large companies. They get their paycheck, health care, and 401(k) provided by their employer. Oh, I forgot, they also get some sweet stock options from the company. On the face of it, this looks great.

Get your paycheck direct deposited twice a month. Have some modest deductibles and co-pays for your health insurance when you need to go to the doctors. Deposit money into your 401(k) account every month. Then plan on sticking around long enough for your stock options to vest. As they say, “Life is good.” Or is it? Dig a little deeper and you can see the potential issues that may arise. The Company’s 401(k) employer match is in company stock. Because you work there, you think you know the company very well. So you decide to put all of your 401(k) plan contributions into the company stock in your 401(k) plan. Now you have your income, health care, 401(k) plan, and stock options all tied up into one company. Does this look like a good idea to you? I didn’t think so. If you lose your job, you could have issues. If the stock tanks, you will have issues. If you lose your job and the stock tanks, you really have issues.    Any investment profiles are hypothetical; asset allocations are presented as examples only and are not intended as investment advice.

Not having adequate Insurance

No one likes to talk about insurance, much less buy more of it. This is very understandable. However, insurance serves a very important function. By having insurance and paying the premiums, you are sharing (some of) the risks with the insurance company. Investors with dependents should consider life insurance. Dependents could be a spouse, minor children, or perhaps other family members. The objective here is simple. If you pass away, your dependents can use the death benefit from the life insurance policy to keep them in a similar lifestyle they had while you were alive. However, based on what I see, not everyone plans on dying. These folks have dependents but no life insurance. It’s fascinating…the last time I looked up the odds on dying they were still at 100%.

Younger folks are not so concerned with dying. OK, that’s fine. They should, however, be concerned with becoming disabled. If you get injured, you (likely) can’t work. If you can’t work, it’s likely you can’t pay your bills. You can’t count on Social Security Disability Insurance either. To become eligible to collect Social Security disability is difficult and the payments are not significant. Younger investors need to take a hard look at getting disability insurance. The policy will pay generally up to 60% of your income if you become disabled. For younger people the odds of becoming disabled are significantly higher than passing away. The good news is about one-third of workers have some disability insurance through their employer.¹

Property and casualty insurance is a must for all investors. Auto and homeowners policies are essential. When someone buys auto or homeowners insurance they select the amount of coverage. However, many states will regulate the minimum coverage needed for an automobile policy. Many states will require a minimum amount for bodily injury and property damage. Also, for people with a mortgage, many banks and lending institutions will require a certain minimum amount of coverage on a homeowner’s insurance policy. Beyond that, the insured gets to decide how much coverage and deductible they want. For example, someone may decide to get $100,000 of liability on their vehicle. This might initially seem like an acceptable amount of coverage. However, when considering the potential liability and lawsuits, this amount really isn’t adequate. This is why most everyone will need an umbrella policy. Umbrella policies, however, have a high deductible, usually $300,000-$500,000 before the coverage “kicks-in.” These polices will require coverage on the auto and homeowners policies up to the deductible. Umbrella policies also cover some potential claims not covered by homeowners including slander, libel, and defamation of character. Most people should purchase their personal umbrella policy from the same insurance company that provides their automobile and homeowners insurance. This is important so that there are no gaps in the coverage and you may be able to get a better rate. Consult your insurance agent to see that you are adequately protected.

Tee it up

We can’t keep you out of the sand traps or the water hazards. I’m sorry but you’re on your own with that. You may need to take a golf lesson or two from the golf professional at your county club to improve your score. Spending some time at the driving range helps too. Golf, however, is just a game. OK, maybe you have some financial stake in the outcome with the others in your foursome. Hopefully these aren’t big stakes and it’s just a round of drinks or two after the match. Nonetheless, your financial planning is not a game. You will need to be prepared to get through your round without a Mulligan. You want to be able to enjoy yourself on the 19th hole. This means assessing all of the risks.


You only get a Mulligan in golf. There are no financial planning do-overs. Avoid chasing the hot investments, investing too much in one company, and not having adequate insurance. If you need a financial caddie to help you avoid looking for a Mulligan, please give me a call at (860) 645-1515 or email

Thomas F. Scanlon, CPA, CFP®

Thanks for your referrals!

The information contained in this report does not purport to be a complete description of the securities, markets or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the forgoing material is accurate or complete. Any opinions are those of Thomas F. Scanlon, CPA, CFP® and not necessarily those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. You should discuss your tax or legal matters with the appropriate professional. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.

Life insurance policies have exclusions and/or limitations. The cost and availability of life insurance depend on factors such as age, health and the type and amount of insurance purchased. As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. In addition if a policy is surrendered prematurely, there may be surrender charges and income tax implications. Guarantees are based on the claims paying ability of the insurance company. Keep in mind that individuals cannot invest directly in any index. The NASDAQ Composite Index is an unmanaged index of securities traded on the NASDAQ system. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Investments and strategies mentioned may not be suitable for all investors. Past performance does not guarantee future results.

¹ New York Times February 5, 2010