High-Stakes live tournament crusher Dan Smith has been talking to PocketFives about how players have shifted more towards investing with their capital. Times have changed rapidly from the days of life-money and a poker bankroll to keep separate from everything else.
Complicated BusinessThe world of finance is as complex as it gets. And just like in poker, many people overestimate their competency at investing.
Another similarity to poker is that many people ignore bankroll requirements when seeking out “get rich quick” investments, just as they do when playing stakes a couple of levels or more high than usual.
For these reasons, not all poker players should be following the same strategies when it comes to investing part of their poker bankrolls.
“I don’t think that it works in such a way where once you get to ‘x’ amount of dollars, you can start investing. I think you want as much of your capital working all the time as you can. Money that’s just sitting there in a checking account or in a box is going down in valuation. As time goes on, I would put more and more money aside. I try not to cash it out unless I have a very good reason to.”
Being in 7th place on the All-Time Live Tournament earnings list is a lot different to somebody on the fringes of high-stakes.
“Specific financial situations dictate how you manage your bankroll quite a bit. If you were still at $5/$10, the way you should manage your bankroll is very different to being pretty wealthy and trying to grow your wealth further. I have mostly tried to have as much of my money working as possible in liquid [investments]. If I ever needed it, I’d be able to have it within a couple weeks.”
He adds that compared with regular investments, a player finding a great game one level higher up the stakes ladder is likely to find a better return. So, with this in mind, no player should ever deprive themselves of poker bankroll for the sake of making an investment.
Smith then talks about the need to be honest about skill level when it comes to risking money in the world of finance. Risk tolerance can vary wildly too.
“Some people will just do their best mostly just buying index funds and not doing anything clever. Some people are very skilled gamblers and investors. They should manage their money very differently.”
There’s no doubt that in today’s world there are countless avenues to invest money with potentially high returns, but nothing is ever guaranteed. Poker players do tend towards an appetite for risk but like Smith says, those with limited capital must choose investments carefully.