Personal Finance Lessons from IPL
The IPL seasons was promising exciting as ever. If you are one of the ardent fans of IPL, there could be several personal finance lessons that you can draw from the way the shortest version of cricket is played. T20 cricket has several rules and regulation and the way it is played, which you can also apply to your investments to achieve your goals over a period of time.
Whether you support Chennai Super Kings or the Mumbai Indians, we can learn some valuable financial lessons from IPL.
1. Start Early
The initial overs of the power play are the best time to take a lead. Many a times, the runs scored in the beginning decide the fate of the match. In a similar manner, when it comes to investments it is always better to start early. For one, being young with little responsibilities allows you to save more for your goals. Furthermore, the earlier you start, the more the power of compounding works for you.
2. Do a proper ground-check before investing
It important for a captain and his team to observe the fields and pitch before going for a toss because it helps them understand the suitable conditions of ground and what their strategy should be. Similarly, before investing, investors should understand their risk profile and goals because that will help in mindful and sound investing
3. Provide for contingency
One bad over can do the damage. So, a captain needs to have an alternate strategy in place to counter-attack, if ace bowlers have failed to deliver. Will he introduce spinners or change the field placements? All depends on the situation and the need of the hour. Likewise, life might throw a lemon at you in the form of job loss or medical emergencies. It can threaten your existing investment plan and put your family at high financial risk. By building an emergency fund of upto six months of expenses and by insuring yourself, you can mitigate the risk.
4. Diversify your portfolio
A team needs to have a good mix of big hitters, fast bowlers & spinners, all-rounders as well as young and the experienced. It ensures variety and an ability to tackle every situation. Similarly, you need to choose an asset allocation that suits your risk appetite. You need to choose an appropriate mix of equity, debt and liquid assets that will help you weather all market storms.
5. Make use of the strategic break
Every match has a strategic time break where the team discusses the next level strategy for the remaining overs. Similarly, in goal-based planning, one should take out time and discuss about investment portfolio with their financial advisor. It is advised to review your portfolio and make changes as per your goals whenever necessary.
6. Take the assistance of a coach
Taking the help of a coach often brings a fresh perspective and experience, which can act as a great differentiator. Sometimes, a team needs a third-party to critically analyze their strengths and weaknesses and to work on their flaws. Similarly, taking the help of a professional advisor will help you identify your financial goals and your risk appetite. They can understand your financial needs and accordingly chalk out a comprehensive goal-based plan.
Conclusion:
Investing like IPL matches can be an emotional roller-coaster. Have a game plan and stay put to emerge a clear-cut winner. We at Nivesh Ki Paathshala are always available to guide you through your financial journey.