In a cricket crazed country, the IPL has turned into a mix of cricket and entertainment, bringing in people from all walks of life. We have just embarked on a new financial year, and the time is perfect to understand the common point between investing and cricket that we could imbibe. Just the way T20 as a format has redefined the game, systematic plans (SIP) have redefined the way one invests in mutual funds. There are more similarities between the game and investing, which you could take cues from. These eight lessons from cricket, when taken in the right spirit, can help enhance your financial life.

1. Team selection matters

Every team has a mix of players– batsmen, bowlers, all-rounder and wicket keeper. Their combined performance decides the outcome of the match. Investing is no different, you need a mix of asset classes, like equity and debt in the right combination. Mutual funds offer diversification and is an indirect route to stock markets.

2. Managing risk

Cricket is a game of winning and losing. When it comes to investing, picking your funds wisely is cruicial. So, diversify your investments into different asset classes and plan out your investments over different time frames to de-risk. Choose equity for long-term investments and debt for short term investments.

3. A good start

Like winning the toss is a good start in an IPL game, when it comes to investing, making an early start is recommended. An early start gives investments more time in the markets and the power of compounding will act in your favour.

4. Playing to a plan

Teams follow a plan depending on the opposition and the playing conditions. You could take a leaf from this approach with your investments and device plans for different financial goals. This way, you will have different investments for each of the goals, tailored to meet the desired results.

5. Fitness and tests

A fit player will be able to do justice to not just himself, but also to his team’s performances. Likewise, your ability to adapt to changing markets will help you invest better. Stay abreast with the market conditions, lest you are taken in by surprises.

6. Power play

This is a wonderful concept in T20, by which you can take advantage of fielding restrictions. When investing, you could do the same by investing more when markets are down, even as you maintain regular investments at other times. So, invest lump sum during downfall and invest windfull gains to avoid splurge.

7. Every run counts

The game is a test of patience; you need to take as many singles as you can score boundaries. By the same logic, when investing, you need to invest irrespective of market movements. A systematic way helps your every investment count. Invest small amounts in the form of SIPs to help you achieve more over a period of time.

8. Run rate and targets

The major attraction in a game is the run rate or the score posted by the team batting first, which is what the second team needs to achieve. In case of investments, making a start is fine, but you need to keep track of your fund’s performance to know how it is faring and if it is on course to achieve your goal.

olmdesk@outlookindia.com