If you’re a fan of the races, you might be looking forward to the 2026 Grand National, which is taking place between 9 and 11 April.
The historic sporting event has entertained spectators for more than 180 years since it was founded at Aintree Racecourse in Liverpool in early 1839.
But the Grand National isn’t only good for entertainment. It can also be useful to help us understand investing.
Placing your bets: risk v reward
One of the principal sources of entertainment from the Grand National is betting on the horse you think will win; the Telegraph estimated that £250 million would be staked on the Grand National’s main event in 2025.
When you place a bet, you are putting your own money on the line with the ambition of receiving greater returns. This is risk v reward, a core principle of investing.
If you bet on a horse that has short odds, this means success is more likely, and your returns would be modest. In investing, this mirrors products such as bonds, which are low risk but offer smaller potential investment growth.
However, if you bet on a horse with long odds, this enhances your risk but also the amount of money you could win. In investing, this is closer to putting your money in the stock market – there is greater risk because a market dip could cause your shares to fall in value. But shares may also deliver better returns compared to bonds (note that risk levels change depending on the types of companies you invest in).
Your investment strategy depends on your appetite for risk. If you favour stability and security, pick a horse with short odds of winning. Otherwise, if you’re not afraid of risk, consider giving the underdog a chance.
Hurdles: market volatility
The Grand National is one of the world’s most famous jump-racing events – rather than a straight race, it features incrementally placed hedges that horses must successfully vault to stay in the competition.
It provides an additional layer of challenge; sometimes, horses easily clear these obstacles, and on other occasions, they might stumble and fall behind.
Similarly, throughout every investment journey, shock events like geopolitics, company performance, or inflation can cause the stock market to tumble. These hurdles affect every investor, but the consequences aren’t identical – some investments rise in value while others fall.
Market volatility can deter many people from investing, particularly those who are risk-averse.
However, it’s important to remember that just because your horse stumbles doesn’t mean they can’t get back in the race. That’s why you may want to take a long-term approach to your investing – just because your investments dip in value doesn’t mean they won’t recover over time.
Track conditions: economic outlook
Like all outdoor racing, the weather can have a significant impact on the outcome of a Grand National race.
Poor conditions like wind and rain can muddy the track and make it more difficult to compete. Alternatively, if the sun is shining, the air is still, and the track is firm, these ideal racing conditions can lead to fast-paced competition.
The same is true for markets during periods of economic prosperity or decline.
If the global economy is stagnating, like a bad track, stock markets will also feel this slump, as people are less inclined to invest. With lower investment, valuations dip, and overall investment performance is inhibited, which can lead to a bear market.
On the other hand, if the economic outlook is healthy, investors are more inclined to invest, and the stock market may see widespread growth. If this persists for long enough, it comes to be known as a bull market.
Knowing your investment track conditions can help you take advantage of economic growth and prepare to weather the storm during a market downturn.
Racing types: asset classes
There are 34 competitors in the Grand National, each a different type of racer.
These various racer profiles are useful when it comes to understanding the role that different asset classes play in your portfolio. For example:
- The favourites: Equities – These attract the most attention and are widely used in investing. They can offer significant returns, but can also be volatile.
- Steady performers: Bonds – Returns aren’t spectacular, but they provide reliable growth.
- Wildcards: Commodities – Like a horse without a jockey, they can be hard to predict. Their performance is based on external factors, like geopolitical events.
The type of rider you bet on (or invest in) is important, as different riders have specific risks and rewards. Knowing the attributes of who and what you are betting on can help you make more informed investment decisions rather than leaving everything to chance.
Building a winning stable: diversification
While it might be exciting to bet all your cash on one horse, this isn’t a reliable way to create wealth (even though it could net you a significant amount if successful).
Instead, you could place various bets across different contenders: a group of favourites, a handful of steady performers, and a couple of wildcards. Doing so spreads your overall risk, which could help you achieve steadier returns.
You can do the same with investing by creating a portfolio of diversified investments, which takes advantage of different asset classes, stock markets, and geographical locations to help you spread risk.
This means that, if your investments in one market dip, holdings in other areas might rise, keeping the overall value of your portfolio stable.
While diversification is less glamorous than high-stakes all-or-nothing betting, it boosts your chance of seeing real, long-term growth to help you reach your financial objectives sooner.
Get in touch
If you want to learn more about how smart investing can boost your financial plan, get in touch with your Milsted Langdon financial planner today.
Please get in touch or email us at advice@mlifa.co.uk for more information.
Please note
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.