During our first lockdown in early 2020, I became enamoured with the game of chess. My dad taught me how to play when I was very young and I remember being part of a club around this time.

When I picked it up again, I believed (quite naively) that I would be quite good, owing to my background. A very humbling experience followed my introduction to online chess. I lost many games.

However, over time I started winning more and my chess score (ELO) began to rise again. Quickly I became good enough for my Dad to no longer want to play me.

I learnt many things about the game during this time. Most people seem to believe you must be very intelligent to play well. It is a trope often used in film, such as when Sherlock Holmes plays Moriarty, or HAL from 2001: A Space Odyssey (a computer beating world champion Garry Kasparov happened earlier, in 1997).

In actuality, pattern recognition is much more important. Although the number of unique chess positions is inconceivably large (more than 70,000 after only 4 moves), certain patterns are prevalent across games. Learning checkmate patterns, tactics and key concepts will give you more of an edge than a few IQ points.

As with all games and sports, practice makes perfect (well, you need a computer to play perfectly, but practice helps). Playing game after game solidifies important patterns in your memory and helps you identify your mistakes.

But the key to it all is what makes chess such an engaging game. In any given position, there is a best move and both players are trying to find it. The game continues like this, move by move. The better your opponents, the less room for error, as even small mistakes may cost you the game.

While I don't truly believe being a good chess player improves your problem-solving skills away from the board, this method of trying to find the best move each turn does hold relevance in other areas of our lives.

I find many investors feel the need to react to current events. With the third year of COVID in front of us, there has been a lot to react to. Interest rates are very low, but were constantly threatening to rise. We've seen inflation spikes as we emerge from lockdowns. We've just had two years of share prices soaring while economies struggle on. It is understandable if these events drove some investors to act.

In a chess game, it is common to get frustrated after making a bad move. This leads to more bad moves and usually resignation. I have personally thrown winning games due to overconfidence and carelessness. Games are won by consistently looking for the best move.

During March 2020, NZ saw record flows between KiwiSaver funds as people reacted to plummeting share prices. Those investors who switched to defensive funds missed out on a rapid and persistent rebound. Those who stayed put did very well over the year.

On the other hand, other investors believed share market gains were unsustainable moving in 2021, with the S&P 500 index up 16%. The index would go on to gain more than 25% last year.

Lastly, many investors are tempted to invest more aggressively when the going is good, such as moving more capital into shares. Without proper consideration of their goals and risk tolerance, this can lead to excessive risk-taking.

Even if their decision-making wasn't perfect, these investors should start thinking about their next move. Maybe they sold all their shares in fear during March 2020. The next best move may be to purchase shares again. Good decision-making is about what is best here and now.

Investment decisions can have considerable impacts on a person's long-term wellbeing. Before we make these decisions, we need to see the whole board. It shouldn't be about reacting to what happened yesterday. Not only can we not change the past, but we also know this isn't useful for predicting the future.

Much like a chess game, investing should be about making the best decision for the current moment. This isn't always easy if we are bombarded with distractions or haunted by past mistakes. Don't let that distract from looking for the next best move. Your future self will thank you.