6 Personal Finance Lessons To Learn From The Cricket World Cup
Jun 04, 2019

Author: Divya Grover

(Image source: Image by mohamed Hassan from Pixabay)

After the IPL, now it's the World Cup 2019 fever that has gripped cricket fans all over the world. In India, where cricket is a religion and the cricketers are revered, emotions run high during every match.

The sport, like most sports, has a delicate balance of discipline, rigorous practice, planning, team spirit, and a degree of aggressive competiveness.

Drawing parallels between cricket and personal financial planning, we see that the strategies applied in cricket can help you achieve your financial goals.

As India readies itself to face its first opponent in World Cup 2019 tomorrow, we bring you lessons that the cricket world cup can teach us about personal finance.

  1. Know your goal

    Defeating the opponent is the goal of every team. To prepare yourself for the game, it is important to know your opponent. First rule of preparation is never underestimate your opponent, even if you have an impressive success record.

    In personal finance, your opponents are escalating real inflation and the googly of volatile market conditions.

    Hence, your first step to preparation should be setting S.M.A.R.T i.e. Smart, Measurable, Achievable, Realistic, and Time-bound financial goals. You can win only if your goals, be it big or small with short-term or long-term horizons, are properly defined.

    [Read: Here's What Could Make Or Break Your Financial Goals]

  2. Choose the right team members

    Players are the biggest asset of the team and can make or break the World cup dream. Therefore, the team members should be selected carefully and must comprise of right mix of players such as batsmen - the big hitters as well as the slow and steady ones, all-rounders, spinners, fast bowlers, and super agile fielders/wicket keeper.

    If the batsmen fail to score a decent total, the bowlers and fielders can make up for it by trying to take early wickets, the same principle is applicable the other way round. Every player contributes to the team in their only expert way to win the world cup.

    Similarly, your investment portfolio should consist of different asset classes and types depending on your goals. For long-term goals like retirement, children's future expenses, your portfolio should include wealth-creating assets like equity-oriented mutual funds along with a small allocation towards debt.

    For short to medium term goals, you can include a balanced mix of equity, debt, money market, gold, and bank deposits.

    While the equity component can help in capital appreciation and overcoming inflation, debt and other traditional avenues provide a safety net when the markets turn volatile. Thus, each asset will work in a different way to enable you to achieve your goals.

    And as team player, follow a consultative approach. In personal finance parlance, consult your investment adviser and involve your family to accomplish the envisioned financial goals.

    [Read: Why You Should Not Ignore Personalized Asset Allocation While Investing]

  3. Get a good early start

    Getting a good head start sets the direction of the game and it becomes easier for the team to reach the goal. For example, if the target is to chase a big score, the batsmen will have to first get set and then make runs: fours and sixes, and get going to chase the goal.

    As an investor, you benefit more by investing when you are young. If you are able to start investing even with small amount, and increase the contribution steadily, you can create a big corpus.

    But the later you start investing, higher the amount you will need to invest to achieve the same goal or else you will end up with a lower corpus than what you wanted to achieve.

    [Read: Why Starting Young to Plan Your Retirement Works!]

  4. Devise a strategy

    Once the target is known, the team can work towards achieving it. This can be done by devising a strategy based on the team's current situation and the required target. If the batting team needs more runs in less number of balls, then they will have no choice but to play big hits, i.e. play aggressively.

    On the other hand, the fielding team will have to set the field and bowling style to hinder the batsman from making any runs. Thus the strategy for both teams will differ because their goals differ.

    Likewise, investment strategy is different for every investor. Your investment strategy will depend on your own financial situation requirement such as your goals, age, income & expense, time horizon to goal, and risk appetite.

    If you are young, without dependents and in a higher income bracket, you can follow an aggressive approach towards investment, take risks, and allocate a higher portion to equity-oriented products.

    Whereas if you are older and have dependents or if you are nearing retirement, you should follow a slightly conservative approach and invest in hybrid funds, debt & money market instruments, bank deposits, public provident fund (PPF), small saving schemes (SSS), etc.

    [Read: Have You Planned A Strategy To Invest In Mutual Funds In 2019?]

  5. Follow the rules

    Players are expected to follow discipline while playing and required to adhere to the rules of the game. They face a penalty whenever there is a breach in rules.

    There may be times when a player from the opposite team may try to provoke a team member or at times a player may be under serious pressure during a crucial point in match. At such times, the players need to keep their composure and stay calm to avoid making any hasty decision and mistakes.

    Like a player under pressure, as an investor, you too need to keep field panic away and adopt the 'slow and steady' batsmen's approach during short-term fluctuations in market. You should also not heed to the financial advice from friends or relatives who may not have enough knowledge about the subject.

    Follow a disciplined approach towards investment by staying invested for long-term to overcome volatility and get higher returns. This will help you counter inflation and ultimately achieve the goals.

    [Read: Will Market Turbulence Affect Your Financial Goals?]

  6. Match review

    Winning and losing is part of the game. Regardless of this, after every match, players and their coach sit together and analyse the overall game along with individual performance of each player.

    They also determine if there is need of change in overall strategy or if any player needs to improve their performance.

    Likewise, investors should review the schemes' performance in their investment portfolio regularly and evaluate the progress.

    If an investment is consistently generating lower returns, then you must check for better alternatives to invest in.

    [Read: Things To Do To Keep Track Of Your Mutual Fund Performance & Investments]

Research is core part of investing, without it your investments will be just based on speculations.

However, not everyone may have the time and knowledge to select the best avenues suitable for their needs.

In such a case, it is advisable to consult a financial coach i.e. a financial adviser who will be able to handhold and guide you on your journey towards the financial goal.

Whether India wins the World Cup remains to be seen, but by following the lessons mentioned above, winning the Wealth Cup will surely be within your reach.

Editor's note: Do you wish to win the Wealth Cup to secure your family's financial future?

PersonalFN can assist you to plan your life goals like:

✔ Children's Education

 Children's Marriage

✔ Dream House

✔ Retirement

For your dreams to convert into reality, there's no other alternative to effective planning. Click Here to Schedule a Call with our Investment Advisor!

Happy investing!

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