When I first learned to play golf, my father told me to be aware of where the dangers were before taking a shot. He said that field management is often as important as having the perfect swing. And all these years later, I’ve come to believe that the same can be said about managing a portfolio and investing money.

Not having the right knowledge can paralyze you, because you are afraid to make a decision; conversely, having the right knowledge will allow you to prosper.

If you do your homework, you will probably conclude that a slow and steady investment approach is the key to capitalizing on your money. One mistake people make when playing golf is trying to hit the ball too hard. This is very similar to someone taking more risk than necessary when investing. You’ve heard the old saying: “Slow and steady wins the race.” Well, that’s true with investing as well as with golf.

I was excited for Winfred to listen to my advice when we played those holes at the Dallas National Golf Club. One of the biggest mistakes people make in golf, and similarly in investing, is making drastic and overly risky decisions. Watching Winfred pause to consider her next move, and the advice she was receiving, gave me great hope that he would do the same every time a money move came along.

When Winfred got the shot into that sand trap, her first instinct was to overreact and try to hit a long shot. The same goes for people who lose money on an investment; they will generally attempt to overcorrect while taking even greater risk. Most of the time, all you do is lose even more money.

A prospect is an important tool you need to play the game properly. Technically, a prospectus is a legal statement that requires companies to adhere to transparency standards by disclosing certain facts and statements to ensure that investors are not misled in any way. And while reading long and tedious financial documents may not seem very exciting, it can tell you a lot about a company’s intentions.

For individual investors, the trick is to distinguish between statements that are likely to appear in almost any prospectus and other statements that inform you about the various qualities of a company. The most important factor to remember is that the prospect describes projections, not actual events. There is no guarantee that the company will meet its sales and profit targets, so it is really important for the investor to look at the prospectus and decide if the assumptions are realistic.

Going back to our metaphor, this is similar to golf in that you need to read the terrain and decide if the shot you are about to make is realistic. In addition to the prospectus that illustrates the current position of the company, it also provides detailed details on how it has performed in the past. It is very important to learn from the past, not only in investments but also in golf.

Winfred and I play at Dallas National on a regular basis, and have discovered over the years what our strengths and weaknesses are on specific holes. We have learned from our good and bad shots in the past, and we continue to adjust and improve our games from our learning experiences. Whether it’s golf, investing, or just life itself, it would be wise to do the same.