What Mutual Fund Investors Could Learn From The World Cup

Posted On Friday, May 31, 2019

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The World Cup fever catches on and for the next two months India will be busy checking scores. Cricket is far more than just a game for us. Cricket signifies sportsmen spirit, dedication and the ‘never give up till the last ball’ attitude. We being the financial nerds that we are, can’t help but think whether cricket influences our financial behaviour. Investors can learn a lot from cricket and implement it in their financial lives. Let’s have a look at 4 points that investors could learn from cricket that can be used while planning finances.


1. A good start leads to a good score - In cricket, it becomes easier to score 300 when you score well in the first 10 overs. However, if you start scoring more towards the end of the game, chances are you might lose wickets and not make enough runs. As a result, you may need to work extremely hard later on to reach a good score. In the same way, the time during the earlier years of your life is like a precious wicket. Try not to waste those precious years as you can afford to take on more risk. When you begin early, you begin to build a steady corpus for yourself. Let’s take an example:


Mr. EarlyMr. Late
Started investing at 25 yearsStarted investing at 40 years
SIP @ 12% Returns: Rs. 5,000 per monthSIP @ 12% Returns: Rs. 10,000 per month
Period of Investment: 35 yearsPeriod of Investment: 20 years
Total Amount invested: Rs. 21,00,000Total Amount invested: Rs. 24,00,000
Amount accumulated: Rs. 3,24,76,345Amount accumulated: Rs. 99,91,479

Disclaimer: The above numbers are for illustrative purpose only. SIP does not assure returns/profits, nor does it guarantee protection against loss during market decline.

2. A well-balanced team achieves overall target – To hold the world cup is every team’s ultimate dream, but only a team with the right mix of great batsmen, terrific bowlers, athletic fielders and a focused wicketkeeper will take it back home with them. Likewise, a portfolio that consists of a diversified mix of asset classes such as equity, debt and gold helps to balance out risk proportionately. It is important to have an allocation to equity as it plays a crucial role in long term wealth creation. Investors who want to be in equities but are overwhelmed by the wide array of choices to gain from the long term potential of equity investments and at the same time want to diversify their equity portfolio can look at an equity fund of funds – a single equity fund that eventually invests your money in other well-suited equity schemes. Moreover, for all your short term investment needs allocate your assets in debt funds and a well-balanced portfolio is not really “well-balanced” if a 10-15% of its allocation is not done in gold.


3. Maintaining a great run-rate is essential – Die-hard cricket fans enjoy a match when batsmen hit 6s and 4s. But let us not forget that the actual score comes from 1s and 2s played consistently as well. To hit boundaries certain bowling deliveries need to be identified well, but if players try to hit 6s and 4s every time, there is high chance for the team in losing wickets sooner than later. The same goes with your investments. There will be times where you will make fantastic returns on your money but the important thing is looking at the track record of the fund which would have generated decent returns over time. A track record of a fund, across different market cycles, gives investors an insight about the fund's performance during bull and bear runs.


4. Re-evaluate the team strategy – Back in 1983 when our Indian team was playing its historic world cup finals, the captain famously said just one thing to his team “If this is not a winning total it’s definitely a fighting total.” Even today, the match is considered as an epic win in cricket history. Many a times; things don’t go as planned such as the competitive team having outstanding fielders, starting off with a low run-rate or fall of important wickets thus giving that impending fear of losing the game all together. However, if the team remains calm, re-evaluates their situation, then the team can look forward to a good win by staying focused. Likewise, no matter how prudent a planner we may be with finances as with our other life responsibilities there can be those unexpected expenses, large or small, which can take on us unawares. During such a situation of contingency, one needs to stay calm, re-evaluate their situation and see what can be done now by staying focused on achieving the long-term goals.


Like sports, to excel in investing, we suggest that you need to practice regularly, stay disciplined, avail professional guidance through financial advisors and manage risks judiciously. We don’t know if our team is going to create history once again at the World Cup championships, but what we definitely know is that by following all the things we discussed above, you could create a future for yourself that is financially secure and well-planned.




Disclaimer, Statutory Details & Risk Factors:


The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. Please visit – www.quantumamc.com/disclaimer to read scheme specific risk factors.

Above article is authored by Quantum.

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