TomorrowMakers

Use your passion to your advantage. Score an investment ‘six’ with your love for the game.

4-cricket-rules-that-can-be-applied-to-the-world-of-investment

Cricket rules our national psyche.

Though it may appear to be a straightforward sport where each team endeavours to score the maximum runs in a specified number of overs, it is far from being so.

Within the purview of the rules that define the game we love, there are some interesting parallels that can be drawn with best practices in the investment world. Read on and see for yourselves!

  1. A “free hit” off a no-ball:

The rules of the game have slowly become more batsman friendly, none more so than a “free hit” off a no-ball. This essentially means that the batsman gets a free license to hit the ball however and wherever, knowing that he cannot be ruled out. In such a situation, nothing less than a ‘six’ would be acceptable to cricket fans- not only does this add to the score, it boosts morale!

An interesting comparison can be made with getting a bonus, or an inheritance or monetary gift of some sort. When you get a sudden inflow of cash, you should make the most of it. Explore investment plans that require a one-time investment and watch with pride as your gift grows in value over time. 

Related: Lessons on investing from creating a cricket dream team

  1. Assistance from the Third Umpire:

The third-umpire came into existence towards the latter half of the 90’s and has been in existence ever since. Benefitting both batsmen and bowlers, this review technique often gives the players relief from wrong decisions that on-field umpires are prone to make.

Today’s investors are empowered with numerous advisory modes, including market commentators, stock-picking experts, mutual fund managers and industry reports. The lesson to learn is that though you may think you have your own idea of what is right and what is wrong, you cannot make prudent decisions without being well informed. Firstly, you must monitor your investments after you have purchased them. Secondly, you must keep yourself updated with money matters.

  1. The “Switch-hit”:

One of the most interesting rules of Cricket is the “switch-hit.” Under this style, a right handed batsman is permitted to switch to a left-handed stance and play the ball as he pleases. In years gone by, this was forbidden as the batsman was presumed to have changed his orientation in the middle of the game.

In the investment world, an interesting parallel can be drawn to switching options in market linked insurance products such as Unit Linked Insurance Plans. For investors who are just starting out, a high percentage of equity investments is good to have in your financial portfolio, but as they grow older, they should ideally switch to safer debt funds. This option is available with Unit Linked Insurance Plans that provides investors the flexibility to invest as per their risk capacity,  

Related: Simple ways in which you can diversify your financial portfolio

  1. Segregate Emotions:

Though not a hard core rule, to be a good player it is important to have an objective approach to the game, which is why MS Dhoni’s Captain Cool title is one to be envied. On a cricket field, every player is trained to control his emotions and focus only on the sport in question.

The same rule applies to investing as well. Emotional investment based on positive “hunches” and biases seldom pay off. In addition, if an investment objective is met, do not hesitate to book profits and move out.

Related: Types of Cricket Fans vs Types of Investors- Which kind are you?

It can therefore be seen that the game of cricket has some uncanny and interesting parallels with the investing universe. Anything to add? Comment below!

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