If you haven't been binge-watching Schitt's Creek on Netflix (NFLX 1.44%), you're missing out. There's a reason the comedy series just swept the Primetime Emmy Awards: The show's themes of acceptance and empathy, coupled with humor, make for a refreshing break from the bleakness that has otherwise defined this difficult year.
But Schitt's Creek offers more than just entertainment value; it also teaches some very important underlying investing lessons. Here are a few you might take away from the show (not to worry, there are no major spoilers here).
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1. Keep tabs on your portfolio
Not everyone is equipped to handpick stocks and assemble a solid investment mix. In fact, investors often turn to index funds because they're simpler and less risky than researching and picking individual companies. Furthermore, some investors prefer to leave the decision-making to others, and so enlist the help of a financial advisor to select the right investments.
There's absolutely nothing wrong with going this route, but if you take it, don't use it as an excuse to sit back and neglect your portfolio. The whole premise of Schitt's Creek is that the Rose family lost its fortune after being defrauded by an unscrupulous business manager whose actions went unnoticed.
Plenty of financial advisors are honest and follow the law, so if you decide to work with one, there's no need to assume the worst. Still, keep tabs on what your advisor is doing and where your money is being invested so there are no unpleasant surprises later.
2. Diversify
You'll often hear that diversification is the key to growing wealth and avoiding extreme losses during periods of volatility -- and no one knows that better than the Rose family. When the Roses lost everything, they were allowed to keep one asset: a town called Schitt's Creek that was initially purchased in jest. That investment, however, saved them from absolute ruin.
You don't have to buy real estate to have a diverse investment portfolio -- but it is a good way to protect yourself in case the stock market has a tumultuous run. If you buy an income property, for example, your rent payments can help maintain your cash flow, even if your stocks are down across the board and your rental property itself loses market value. If you're not interested in buying physical property, get in on the real estate action by investing in REITs.
3. Don't give up
There may come a point when your portfolio takes a major hit and you end up with losses that hurt you for a period of time. You must remember that the stock market has a strong history of making people wealthy. If you experience one setback, don't let it define your entire investing career; pick yourself up and rebuild.
That's certainly what the Roses did. Johnny Rose, the family's patriarch, didn't spend much time wallowing upon being stripped of the high-end lifestyle he was accustomed to. Instead, he aggressively pursued new business ideas -- some more successful than others -- until he ultimately found his niche in a new industry (we'll keep the details a secret so as not to ruin the show).
If your initial investment strategy doesn't work, or you simply fall victim to poor timing and bad luck, don't give up. Instead, learn from your past mistakes and devise a new strategy -- one that allows you to come out ahead.
Most people who watch Schitt's Creek don't expect to take away any serious lessons, but we have much to learn from the Rose family that could improve our finances. Currently, all six seasons of the show are available on Netflix, so it pays to see what all the hype is about.
