The following is an excerpt from Rich As A King: How the Wisdom of Chess Can Make You a Grandmaster of Investing. by Douglas Goldstein and Susan Polgar. 

Initiative: Controlling the Pace of Your Investment game

The game of chess, it would appear, is more than a simple matter of black vs. white. Statistical studies of thousands of historic tournaments have shown that whoever plays White wins a little more than half the time. Over the years, many chess experts have debated the reason for the imbalance.

It would seem that since White goes first, it gets the “one up” on Black, known as the initiative. On the other hand, no chess game ever ended before starting because the player with the black pieces announced, “Since I’ve got black, I’m just going to quit now.” Regardless of which side of the board you play, you have an almost equal chance to win.

In any event, though, the pendulum swings, and a participant in a tournament will get to play both colors. So rather than focusing on what the flip of the coin brings you at the start, direct your energies to playing the best game you can. Interestingly, Bobby Fischer noted, “The turning point in my career came with the realization that Black should play to win instead of just steering for equality.”

He didn’t seem to think that playing with the black pieces was a significant disadvantage.

Similarly, many people make the mistake of assuming that since the big institutional investors have such a huge advantage on Wall Street (their own analysts, large sums of money, and many years of experience), it doesn’t even pay for regular families to have their own portfolios. That kind of thinking, like resigning from a chess match because you have the black pieces, will stop or limit you from ever succeeding in developing a logical, long-term portfolio. Everyone has the chance to do well in the money world, so don’t give up.

Strive for the initiative

When handling your money, strive for the initiative.

In chess, having the initiative means controlling the pace of the game.

In money, having initiative means taking charge of every step of your investing.

You have many tools at your disposal to gain the lead. For instance, you can decide how much money to save and spend each month. Let’s say your savings strategy calls for a $500 monthly mutual fund purchase. Though the fund may have good years and bad, you can put this self-payment at the top of your priority list, thus ensuring that you maintain decision-making power.

Moreover, with either mutual funds or individual stock purchases, you can gain the initiative by selecting your own asset allocation, meaning the percentage of your investments in different asset classes. Assume you’ve put together a plan with a 50/50 split between stocks and bonds, and the stock market jumps up. You can sell some stocks and buy bonds to reset your account to your desired allocation. Though it’s true that the size of your pie will change depending on the markets, which is something that you can’t influence, you can certainly choose how you will react.

Be in control of your choices

Along with taking the initiative to regulate your own big-picture issues, such as the amount of savings you will put away and your portfolio’s asset allocation, you can also take charge of your specific investment choices and, more precisely, how you trade them. Placing an order can involve more than simply asking your broker to buy or sell shares. Your instructions can often influence how much you pay or how much you receive when your order gets executed.