Investing is a Game, We should be play it Smartly

If we analyses closely games are also won by proper strategy and planning like creating a wealth or long term investment plans. Lets take the most cheered game in our country yes we all know its cricket, there are many similarity exists between Cricket and Investing. Cricket is the most loved and viewd game in India and like any other game this game is also played strategically with proper planning and execution. Specifically if the time period is smaller like 20-20 format cricket, strategy is key along with careful planning and patience. We have analysed different aspects of the game and compared with investments so that how to get the best from our investments just like the Twenty20 matches, and play a strong innings.

1.     Physical fitness = Investor Awareness 

In any game Player’s performance depends on his fitness, an investor’s awareness is what helps him decide which investments to make. An informed investor won’t follow the herd or be swayed by hearsay. It pays to do your research before making any decisions. And when in doubt, always consult a professional (your coach) on what course of action to take.

2.     Role of a coach = Professional advisor

A coach brings a wealth of knowledge, experience and expertise to the field. Fund Managers play a similar role in investing. Using in-depth research and proprietary tools, they analyse every single stock or debt instrument before investing to help drive the performance of the scheme. Professional Advisor helps to understand our key strengths and weakness and guide to invest accordingly.

3.     Team selection = Asset allocation

A cricket team is made up of different expert players like batsmen, fast and spin bowlers, wicket keepers, etc. An investment portfolio too needs the right mix of asset classes from equity, debt, cash, gold, real estate etc to name a few. A fast bowler or a Match Hitter (like Chris Gayale) is similar to an equity fund. An all-rounder (like Maxwell), like a balanced fund. But the important thing is to get the right mix of players to build a strong team. It’s the same with your investments. So while making an investment, make sure that we have the right mix of asset classes to ensure that our portfolio won’t be affected by a sudden fall in any one asset class.

4.     Winning the toss = Good Start

The toss plays a significant role and ensures a good start. In investing, an early start is a good start because our money gets more time to grow and benefit from compounding. So let’s seize the moment and start right away to give the money the benefit of time. We will realise that it was our winning decision in the long term.

5.     Planning = Risk appetite

Every batsman thinks before taking a single or hitting a six and every ball that’s bowled is carefully timed and planned  whether its yorker , full length or full toss ball and accordingly dispatched to gain maximum advantage. Just as a player assesses his risk before playing, we too need to make the right preparations before investing. Determine our risk profile to decide how much to allocate in each asset class and whether the time is suitable to play hard or play safe.

6.       Taking singles = Systematic Investing 

Every run adds up. And that holds true for any investments as well through systematic investing. Monthly investments are like taking singles (like what Dhoni and Kohli do most of the time, a good running between the wicket), they ensure that scoreboard keeps on ticking. While intermediate lump sum investments could be compared to the occasional boundary, the discipline of systematic investing could result in a great score over time.

7.       Powerplay = Maximising returns 

In every match there are those overs where the batsmen aim to maximise runs in powerplay by smashing fours and sixes. Similarly in investing, there are times when an investor could look to maximise the growth of his investment. It could be as simple as entering the markets through an equity fund in a bear phase to cash in for the long term. Think of it as hitting a four or even a six by making your investment at the right time.

8.       Wickets falling = Time for review 

There are times when even the best batsmen get out and the best bowlers go wicket-less. A similar situation could occur with our investments that even after investing in good asset class they are not growing. At such times, relook at the portfolio and seek professional advisors help before making any changes to ensure long-term growth.

9.       Under Pressure = Stay invested 

The best batsman knows when to play safe and when to strike. Similarly in investing, while most investors panic when the markets are volatile, we need to hold on to our investments until we reach our goal. But the best strategy is time. So as long as our long-term goals (target score) remains same, stay invested and don’t let the noise of markets (cheers of the crowd) change the mind.

10.   Score and statistics = Goal review 

For a team batting second, what matters is run rate, required rate, projections and more. Any investment portfolio too, should be treated similarly and kept a close watch on. Periodic checks and reviews of each fund’s performance against standard benchmarks and peers determine how it has fared over time.

11.   Player rankings = Individual performance 

Every player is rated on the basis of his skill to secure a position in the global rankings. Likewise in investing, funds are ranked on the basis of their performance track record and history. It pays to do your homework and study the right kind of funds before making any investment.

The best way to learn is to do it in the most interesting way – and we believe there couldn’t be a better way of learning about investments than with everybody’s favourite game!