By Harshad Chetanwala
As the World Cup fever catches on, most Indians will be watching the tournament with excitement for the next two months. Cricket is far more than just a game for us. Cricket signifies sportsmen spirit, dedication and the ‘never give up till the last ball’ attitude.
Investors can learn a lot from cricket and implement it in their financial lives. Here are four points that investors can learn from cricket that can be used while planning finances.
In cricket, it becomes easier to score 300 when you score well in the first 10 overs. However, if you have to score more towards the end of the game, chances are you may lose wickets and not make enough runs. In the same way, the time during the earlier years of your life is like a precious wicket. When you begin early, you begin to build a steady corpus for yourself.
To win the world cup is every team’s ultimate dream, but only a team with the right mix of great batsmen, terrific bowlers, athletic fielders and a focused wicketkeeper will take it back home with them. Likewise, a portfolio that consists of a diversified mix of asset classes such as equity, debt and gold helps to balance out risk proportionately. It is important to have an allocation to equity as it plays a crucial role in long-term wealth creation.
Investors who want to be in equities but are overwhelmed by the wide array of choices can look at an equity fund of funds—a single equity fund that eventually invests your money in other well-suited equity schemes. Moreover, for all your short term investment needs, allocate your assets in debt funds, and a well-balanced portfolio is not really “well-balanced” if a 10-15% of its allocation is not done in gold.
Die-hard cricket fans enjoy a match where batsmen hit sixes and fours. But let us not forget that the actual score comes from ones and twos played consistently as well. To hit boundaries, certain bowling deliveries need to be identified well, but if players try to hit sixes and fours every time, there is a strong chance that the team will lose wickets sooner than later.
The same goes with your investments. There will be times where you will make fantastic returns on your money but the important thing is looking at the track record of the fund which would have generated decent returns over time. A track record of a fund, across different market cycles, gives investors an insight about the fund’s performance during bull and bear runs.
Back in 1983 when our country was playing its historic World Cup finals, captain Kapil Dev famously said just one thing to his team “If this is not a winning total it’s definitely a fighting total.” Even today, the match is considered as an epic win in cricket history. Many a time things don’t go as planned, thus giving that impending fear of losing the game all together.
However, if the team remains calm, re-evaluates its situation, then it can look forward to a good win. Likewise, no matter how prudent a planner we may be with finances as with our other life responsibilities, there can be those unexpected expenses. In such a situation, one needs to stay calm, re-evaluate the situation and see what can be done now by staying focused on achieving the long-term goals.
Like sports, to excel in investing, we suggest that you practice regularly, stay disciplined, avail professional guidance through financial advisors and manage risks judiciously. We don’t know if our team is going to create history once again at the World Cup championships, but what we definitely know is that by following all the things we discussed above, you could create a future for yourself that is financially secure and well-planned.
(The writer is head, Customer Delight, Quantum Mutual Fund)