Currently, around us everywhere we find the fever of Cricket World Cup only. India is a cricket-crazy nation and most of the Indians across all age groups follow this game like a religion. I do not follow cricket regularly but the World Cup has its own level of joy and excitement and this time it’s more special as it is being hosted by India. My younger sister Gayatri and my cousin Shubham are so passionate about this game and have been continuously discussing various teams, their players, strategies, and match ticket availability for the last 2 months. It is annoying sometimes but because of both of them, I have been watching all the matches since the world cup commenced. As India won all the matches till now, it creates more excitement for further matches and we all just are dreaming that India will win that glorious trophy on 19th November 2023.
As I have been following this tournament from the beginning and the journey of the Indian team creates hope in the mind of all the Indians, when I watch all the matches played by our team it gives a message to us about the success mantra. When I compared investment and cricket then I found so many similarities which will help any investor to become a champion in his investment journey. Following are the investment strategies I learned from cricket :
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A Well Diversified Team:
Have we ever seen a cricket team made with 11 batsmen or 11 bowlers only? Of Course ‘No’!! A good cricket team is always a combination of strong batsmen, good bowlers, spinners, wicket keepers and fielders. As our team requires experienced batsmen like Rohit Sharma and Virat Kohli, it also requires Shubman Gill or Suryakumar Yadav. This balance is important because scoring high runs, taking wickets with effective bowling and saving runs with tight fielding are all equally important to win the match.
Similarly, your portfolio also needs the right mix of asset classes like equity, bonds, fixed deposits, gold, and real estate. Such diversification or asset allocation helps you to achieve stabilized returns and it also reduces the risk of the total portfolio.
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Analyze the pitch:
A good win also requires good homework. Before starting the game, pitch analysis is very important. It determines the bounce, angle, and speed of the ball. The success of any team depends on how well they have studied the opponent team. The team needs to know the strengths and weaknesses of the opposite team. A batsman needs to know the strengths and weaknesses of a bowler and vice versa. Analysis of pitch helps captains to choose whether they opt for batting or bowling first if they win the toss and it also helps to decide the best suitable strategy and order of the game for that particular day.
Similarly, when one starts to invest, it is essential to analyze their financial goals and plan their investment strategy accordingly. As awareness of the ground is important for players on the same line, awareness of the fundamentals of investments is equally important for the investor. Whatever asset class one is investing in, deep research, investment opportunity, and risk analysis are important for success.
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Singles are powerful:
To win a match, not only sixes and fours are required but also singles and doubles help to win the trophy. Virat Kohli creates new records day by day by playing consistently with ones and twos along with fours and sixes which help him to stay on a pitch for a longer period.
Staying on the field till the end is far better than hitting a couple of good shots and getting out early. That’s where discipline and patience help to win.
Similarly, in investment, investors can create good wealth with small contributions like SIPs offered by mutual funds. SIPs can help you to score consistently by investing small amounts regularly. It also helps to hit some shots by helping to buy more units when markets are low and create value for the investors when the markets are high.
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Thrive under pressure with patience:
Sometimes chasing the goal needs patience. Cricket is a game of patience and surprises. No one knows which ball takes your wicket or gives you a chance to hit a shot. Staying on a pitch for a longer duration is important. Bowlers do not get a wicket on every ball, also batsmen do not get a chance to hit a boundary or six on every ball. Waiting for the right opportunity is what needs to be done for a perfect win.
The same is happening with your investment. Making inpatient and behavioral decisions leads to a loss of portfolio. No one can earn lots of money or get rich overnight. You have to give time to your investment to grow and compound. Focus on your financial goal is all that matters. Having ups and downs is part of your investment journey, facing them with patience is important and when you are ready to face it with calmness and patience no one can stop you from achieving your financial goals.
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Review your game:
A good player always reviews his performance and learns from his previous mistakes to perform better in the future. Many times we have seen that the same 11 players are not playing consistently. The team is changed according to the game plan. Considering factors like opponent team players, strengths and weaknesses of the opponent team, pitch support, external conditions like rain, humidity, fog, etc. The captain planned his strategies for the match. Every match is different and the team is finalized considering all these things.
Likewise, you must review your portfolio at regular intervals to learn from past mistakes and perform better in the future. Use your experience and observations to analyze your investment performance, and review it so you can become a winning investor with time.
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Never neglect the reserve player:
The reserve player or substitute player is equally important as the team of the final 11 players. He plays a crucial role in case of injuries or unforeseen events. Neglecting this reserve player can turn the result of the whole game. This 12th player is an important factor in a team’s win in any unforeseen event.
Similarly, never ignore the importance of an emergency fund in your whole investment portfolio. These funds give stability in any unforeseen situation like job loss, medical emergency, etc. Keep your 6-12 months’ expenses in an emergency fund to face any situation intact which is not in your control.
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A Good Coach:
A game cannot win only with good players and strategies but it also needs a good coach to guide and inspire the players to give their best. He guides the team to victory. The role of a coach with his team is to guide them constantly for their fitness, strategies, and game plan.
Likewise, a financial professional can help you to navigate the investment world. Financial advisors can help investors channel their investments into the right mix of products based on their financial goals and risk-taking ability.
On a closing note, if we think and check, we can find many similarities between Cricket and Investing. Cricket offers valuable strategies and lessons for the investor and personal finance. So think like a cricketer in your investment journey 🙂 We all wish that India would win this World Cup trophy and become World Champion. Till then enjoy this wonderful game and World Cup tournament !!
Happy Investing!