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The ICC Cricket World Cup, 2015, is definitely the flavor of the season. The Indian cricket team has been performing incredibly well by giving six wins out of the six league games and a quarter final win against the Bangladesh team. The nation is quite impressed with the team, its players, especially after its disastrous performance in the triangular series, prior to the World Cup. To think of it, this turnaround has not happened overnight…but is certainly a result of some of the values that the team believed in and followed. Yes, there are some valuable financial lessons to be learnt from the way our team has been performing. Let’s dig into some of them:
Keep the faith: Our team captain, MS Dhoni was constantly questioned and hounded by the media on the basis of his team selection, but the captain did not budge. Instead, he gave them an opportunity to perform and stood like a rock with them. He kept faith in his team. As a result, the team has been able to play extremely well. Similarly, while making investments, it is important to have faith in your portfolio, without just keeping short term goals in mind. Don’t tinker with your portfolio—instead stay calm, and allow your investments to grow and reap the benefits by staying invested for the long run. Just like the saying goes—after a storm comes a calm—that suggests that let the market conditions stabilize. Do not panic and unnecessarily fiddle with your portfolio just because there is a sudden fall in the markets. This fall could be temporary. So it’s better to wait n watch than be in a hurry. Staying invested and watching your investments closely is the right thing to do at this juncture.
Diversify your portfolio: If you look at our team closely, with every win, there’s a new emerging hero. Every match has been won by a different team member. This was not the case in the past, when we would only watch out for one such player who would help the team win. Today, we are a bunch of winners under one cover. In every match, there’s been a different team member who has given his best and helped the team win. Here, it’s not just that one player but the entire team, a set of people giving their best even when some of them could not perform. Similarly, when it comes to our investments, it is important to diversify your portfolio to reduce the risk of uncertainty in the markets. Plan your investments and diversify your portfolio, instead of putting all your eggs in one basket. Study different sectors, opt for a reputed financial advisor/planner, if needed and make your investments systematically. There are times, when ‘a particular stock or sector’ is performing extremely well but then there could be one such news that could lead to the collapse of that stock/sector. leads to a fall in the stock price. For instance, when the IT sector was doing exceptionally well, we saw a sharp turnaround when suddenly IT major, Infosys Ltd, lost grip on news of top level exits from the company. So, instead of depending on just one particular sector or stock, which may or may not look promising later, it is better to broaden your horizon, diversify across different asset classes and keep the focus. This will help you to accumulate wealth in the long run, just like our Indian cricket team is doing
Take a larger perspective There was a time when the media questioned the presence of team players like Ravindra Jadeja, Suresh Raina and Rohit Sharma, in the team. Well, nobody really expected them to perform. Same was the case with Mohammed Shami, who today has proved himself and is the team’s highest wicket taker—now termed as India’s speedster. Similarly, economic situations often change that lead the markets to behave differently. At this point in time, it is important to stay focused, beware of penny stocks and avoiding advises from anyone and everyone. Ideally, no one can predict on how the markets will perform, so stop approaching or taking small tips from every other person. Do not follow herd mentality here. By taking a cue from the Indian cricket team, there are definitely lesions to be learnt in financial planning. By following these simple steps and implementing them, we can definitely build for the long run.
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