A Financial Lesson from Golf's Worst Collapse

In 1999, the French golfer Jean Van de Velde held a three-shot lead as he headed to the 72nd, and last hole, of the British Open. All he had to do to win arguably the most important golf tournament on the Continent was to score a double bogey or better – a 6 on a par 4. An almost insurmountable lead. Here is what happened:

First, he pulled out his driver to hit his tee shot. A risky move considering his position. The BBC broadcast even questioned his choice, “I’m not sure this is right.” His tee shot went so far right it landed on the 17th fairway rather than the 18th that he was playing.

Next, the safe, and boring, play would have been to simply hit a safe wedge shot back into play, then hit a third near the hole and putt for the championship. Instead, he wielded his 2-iron to try and get all the way to the green in one shot. Now, for perspective for the non- golfer readers, 2-irons are notoriously difficult to hit. Most amateurs don’t even carry one in their bag. Even most pros hit hybrid woods rather than the risky 2. So, you guessed it, his shot smashed against the grandstand and then bounced into the deep rough, a long way from the 18th green.

If you thought that was bad, he hit his third shot from that rough into a water hazard. Ugh! After a penalty stroke, he chunked his 5th shot into a bunker next to the green. Then, finally, he completed his triple bogey 7 to tie for a playoff that he ultimately lost. Maybe the best example ever of snatching defeat from the jaws of victory.

This story has reached almost mythological status among golf fans but, I believe, has two pertinent lessons for those approaching retirement age.

1. First, know the score. In financial planning terms this means knowing how much income you’ll need when you stop working in order to cover your expenses through the rest of your life. Then, how much will you need to accumulate in order to generate that income? If you’re approaching retirement age, how close are you to reaching your savings goal? Knowing your score will help you make sound, informed decisions.
2. As you approach your financial goal, make sure your hard-earned savings are invested appropriately for your situation. Rather than risk everything by hitting your driver, maybe hit your 3-wood for more safety. In other words, now is the time to take only as much risk as you need to reach your goals. Any more and you risk a triple bogey on the 18th hole when you have no time left to recover. So, it may be time to rotate some of your investments from stock mutual funds to safer bond mutual funds. Why? If the stock market takes a dive, hopefully your portfolio won’t take one too right before you’ll need to start withdrawing from it.

Over the years, some have questioned whether Jean Van de Velde knew what his situation was. Most believe he did but made bad decisions anyway. Make sure you know your proverbial score and then make decisions that will most help you avoid a triple bogey when you can least afford it.

Steve Byars, CFP®