6 MUST TAKE INVESTMENT LESSONS FROM FOOTBALL
Are you one of the biggest football fans who probably can name each and every player along with his history. You might be the one who misses on any of the games or tournaments. But, did you know that your favourite sport has a lot many things teach about investments?
Sports have a lot many things to teach, other than just entertaining oneself. Here are Six most crucial lessons on Investments from the world’s widely loved sport – football – that can help you build your financial pyramid, multiply your money, accomplish your financial goals, and live your aspirations.
LESSON #1 ON INVESTMENTS FROM FOOTBALL
Start early. Don’t Waste Even A Single Opportunity.
You can find tremendous examples of players who started their career early. Over 10-12 years they have emerged as successful players in their niche. One such player is Wayne Rooney. As far as I can recollect, when he scored that thunderous goal against Arsenal, he was just 16.
Investment is also something that you must start early. No matter the investments are small or big. If you start early, over long-term, you can accumulate a handsome corpus, multiply your money, and reach your financial goals in relatively shorter time by optimizing the power of compounding.
LESSON #2 ON INVESTMENTS FROM FOOTBALL
Diversify Your Portfolio
A thoughtful team plan and a right mix of players with designed skills set are two very crucial points that can determine your victory or defeat in the game. You can’t imagine a team full of defenders, or of midfield or the forwards, isn’t it? You need a right mix of them to make a winning team.
Similarly, when it comes to creating your investment portfolio, you need to have different asset class and appropriate strategy based on your risk appetite and financial goals.
A Diversified Investment Portfolio acts as the defenders, forwards and a midfield of your portfolio team. The defenders (fixed income investment like Fixed Deposits, PPF, LIC Endorsement Policy) form the backbone of your portfolio. They provide the stability to your portfolio thereby allowing the forwards (Equities) to attack and further the team’s goals.
The forwards have one job to score as many goals as possible. Equity with its potential to deliver maximum returns in the long-term fits the bill. It gives your portfolio the much-needed boost and helps you gain maximum returns.
The midfielder is where the magic happens. The balance between attack and defence. Hybrid mutual fund schemes or dynamic asset allocation schemes are the perfect midfielders for your portfolio.
LESSON #3 ON INVESTMENTS FROM FOOTBALL
Take Calculated Risk.
The risk is must in order to certain any victory. There’s no doubt to it. However, what’s essential to understand is, your risk must calculate one. Similarly, when it comes to investments, the riskier your investment asset the greater the returns. However, you can’t overlook the vitality of calculating the risk. You need to calculate your time horizon, your risk appetite, and your investment objective.
LESSON #4 ON INVESTMENTS FROM FOOTBALL
Review And Make The Necessary Changes In Your Investment Portfolio
Based on the past performance, skill set, and potential of a player, the coach decides how the player will be placed. Similarly, when it comes to investments, it is very essential to review your investment portfolio and make changes as required annually. Rebalancing your investment portfolio is a compulsory part of your annual review.
LESSON #5 ON INVESTMENTS FROM FOOTBALL
Don’t Panic About Up-down-up
Winning and losing is a part of the game. To ensure victory, what a team does is prepare a good strategy, put their best foot forward, review their performance, keep playing, stay focused, and do not give up… it’s a game in which the best team wins. There is nothing to panic about. Panicking only makes thing worst.
Similarly, people panic about equity markets, in spite of high returns over long-term. They fear to invest in equity direct or through due to the volatile nature of the market.
LESSON #6 ON INVESTMENTS FROM FOOTBALL
Have A Coach Who Understands Your Financial Goals
Another important point to note is that a football team cannot perform well without a right coach. It is the coach who creates the strategy and the game plan. Similarly, a trusted financial planner or money multiplier can help you with asset allocation, as he best understands your risk appetite and your financial goals. Also, he can help you make the right investment decisions.