After witnessing depressing COVID-19, everyone is glancing with high hopes for a change and entertainment this IPL. Cricket is a religion for a country with diverse population over 1.38 billion. The excitement is pretty much tangible everywhere be it stadium, streets, or homes. Cricket teaches some valuable & relatable investment lessons as well.
“How much do a team needs on the board to win the match” is a process that goes through captain’s mind? And which is very important to make a tough fight. Determining winning score is equivalent to setting and accomplishing financial goals. Smart, Measurable, Achievable, Realistic, and Time-bound are the factors considered to set financial goals. Every keen player keeps a watch on his opponents’ moves. Similarly, keep a watch on your opponents which are real inflation and the volatility.
To win a match, the selection of right team players is vital. Similarly, while investing, every investment avenue has a role in the portfolio. The investment avenues must be chosen considering age, risk appetite, objectives, financial goals, the time horizon before goals shake, and the risk-return feature of the investment avenue.
The cricket enthusiast knows that the strategy changes from one cricket format to the other. Similarly, while addressing financial goal/s, one need to recognize investment objective; the risk appetite; and the time left (balls left) to achieve the foreseen goals.
A good head-start sets the direction of the game and works in favor of the team to win the game. In the same way, the sooner one starts the process of saving and investing, a big corpus can be built advocated by the magic of compounding.
Pacing up the innings as the match unfolds, maintaining the required run rate always. Similarly, for your investments to roar, the earlier one starts saving and investing regularly, systematically, and prudently; with more investment time horizon you can compound wealth better.
Just being a good player is not enough. Following the rules is equally important. In investing, the market factors and volatility provokes. One should be disciplined for the long-term particularly in equities to overcome volatility, and potentially earn decent returns.
Cricket is full of highs and lows. Any captain keeps a ‘Plan B’ to win the game.
Similarly, if any unforeseen financial emergency occurs, one must have a backup plan. Therefore, building an adequate contingency reserve is necessary to deal with emergencies.
Keeping a target, the scoreboard and run rate to defeat the opponent team, and plans a strategy. Reviewing the investment portfolio to ensure whether you are on track to accomplish the goal. Further, it will help to serve in the interest of long run financial wellbeing.
The way the winning of a team can be attributed to preaching command of the captain. Similarly, seeking an efficient advisor who spoon-feed their clients in creating a robust financial plan with a holistic approach.
Cricket is a sport played with a passion to win. With the same passion, focus on accomplishing your financial goals by making prudent decisions. Believe in the magic of compounding and invest for the long-term, a sure-shot formula to win.