The Indian Premier League (IPL) has us all glaring at our TV screens. If you are a cricket fan, you might be well aware of all the rules that go into playing the shortest form of a cricket match; the Twenty20.
What makes Twenty20 matches particularly interesting is that it needs a certain amount of dedication in gaining more runs in less time, which is similar to our financial motives in life.
If financial explanations bore or confuse you, here are a few IPL match references that you can relate to in planning your investments.
In the first 6 overs of a Twenty20 match, only 2 fielders are allowed outside the 30 yard circle. This is mandatory. It allows the batting team to make the most runs in the initial period of the match.
How you can apply this to your investments?
The key to higher gains is early investment. Do not procrastinate savings or investment intentions, it will only reduce your wealth for the future years. This way by the time you retire you will have a larger share depending on how many months of savings you did not allow to go waste.
Another way to look at it is, make your investments at the beginning of the month if you are a salaried person, as this will reduce your spending on unnecessary expenses.
Check the Field
The captains of the team check the pitch area of the field to understand and strategize their game plan. You should also understand all your investment options thoroughly. More importantly, you should understand yourself; know if you can handle a certain risk that comes with the investment. Will you be able to keep a daily track of those investments or should you put your money in something that does not require you to keep tracking it?
Risk and Rewards
Who should bat first? Does the batsman need to up his game with sixers or play it slow with singles? How to tackle the difficult bowlers?
Just like a cricket match, the market is unpredictable. Sometimes your good past performance may not guarantee the same result a second time. Just like some fast balls may result in sixers, some investments though risky might give you a bounty but the same ones have the capacity to bowl your over, producing losses.
So weigh your risks; because at times it is good to play the safe game and invest in a steady performer with guaranteed results.
The teams get a strategy break to plan or change their moves after 10 overs. Similarly, you need to stop once in a while look at your investment. Ask questions like - Is it where it needs to be? Will you be able to finance your goals and have enough for emergencies?
You can take the help of a financial advisor too if you feel like your money is going nowhere.
IPL is known for its complete entertainment. It is one of the most watched games in India. The players, the team owners, the coaches are all being watched closely. There are sponsors, cheerleading, criticism, praise and the audience shouting slogans at the players. But in the end, the game is all about not losing focus on winning.
Just like IPL, you will have distractions like new schemes or instruments that you cannot make sense of, yet you fall for it because it is the talk of the town.
If you cannot understand it, if it is not a reliable financial institution, do not put your money in it. Focus on what you can control and stick to it. Ultimately, it is your money, you stand to win or lose from the decisions you make.