Cricket: the one thing that unites 1.3 billion people in our country. Known as the gentleman’s game, cricket provides great life lessons. But did you know that you can also take away important financial lessons from the game for your investment strategy?
Well, let’s find out.
1) Teamwork makes the dream work
A cricket team consists of 11 players and all of them have specific roles to perform on the field. Only when the players put up a good performance as a team can they win the match. Similarly, your investment portfolio should consist of different investment options. This can include stocks, mutual funds and money market instruments. Through proper portfolio diversification, you can achieve good returns while minimising your risk.
2) Risk assessment: Take the catch or save the boundary?
Often times, fielders at the boundary face a tough choice. When a really tough catch comes their way, they can either dive towards the ball or wait for it to bounce. When the fielder dives, he can risk missing the catch. In that case, the ball could go for a four. On the other hand, he could wait for the ball to bounce and prevent a boundary.
As an investor, you face a similar question regarding your investments. Should you opt for high returns through a risky investment or prefer moderate returns from a safe investment? The answer to this question depends on your risk appetite. Are you comfortable taking a risk or would you rather prefer capital protection? In the first case, investment in equities is a good option. On the other hand, debt investments are a better choice.
3) Have a game plan
Cricket has three major formats: Tests, One Day Internationals and T20s. The strategy for each of these formats is different. And even in a particular format, take T20 for instance; the team needs a game plan for the match on that particular day. The plan depends on various factors such as the opposition team, weather and pitch conditions and players’ form.
Similarly, you need to have a proper investment strategy when it comes to investing in mutual funds. Based on the investment horizon, you need different investment plans. For example, debt mutual funds are a good choice for short-term goals. But for long-term goals, investment in equity funds can be a better option.
4) Every run is important
Fours and sixers get you cheers and whistles from the crowd. But at the same time, singles are extremely important in a match. As an investor, you may think that you can only start investing if you have a large sum of money. This is not at all true. In fact, you can start your mutual fund investment journey with as little as Rs. 500 per month. Steady investments in mutual funds through Systematic Investment Plans (SIPs) can help you accumulate a big corpus over a period of time. The key factor here is to invest constantly from a young age.
5) Seek advice when necessary
Even experienced cricketers take advice from their coaches when necessary. This helps them identify and improve upon weak spots in their game. Similarly, it can be quite beneficial to seek advice from a financial advisor when required. A good advisor can help you organise your investments and also create a holistic financial plan for the long term.
To sum up, there are a lot of lessons you can take away from a game of cricket. By putting even a few of them into practice in your financial life can help you reap great benefits in the long term.