Smart Investment Lesson from the Indian Premier League

Published On: 29-Oct-2020

The 2020 edition of the Indian Premier League (IPL) is happening by around six months’ delay due to pandemic. However, a delayed event is better against a cancelled event for the cricket fans across the country, who keenly wait for the Indian Premier League (IPL) every year. Apart from the entertainment it aims to provide, the cricketing event provides several investment lessons for the investors to follow. 

Diagram

Description automatically generated

Here are five smart investment lessons from the Indian Premier League:

1. Adjusting to the Circumstances 

Most of the leading sporting events in 2020 had to be cancelled due to the COVID-19 pandemic, and IPL was also one of its casualties. IPL is now happening in UAE, with limited staff in attendance and no live audience. However, when one watches the matches on TV or the OTT platform, one may experience the crowd cheers in the background. 

The broadcasters have added such effects to let the TV audience feel the same excitement as earlier. As such, IPL adjusted itself to the prevailing circumstances but still managed to let the viewers feel the same way. Similarly, one must stay flexible with the investment plans instead of fearing the changes and focus on the outcome. 

2. Diversification is the key

All the eight teams in IPL have a mix of batsmen, bowlers, all-rounders, and wicketkeeper. A mix of different players is considered essential for the team’s strength. Similarly, one must have a diversified mix of investments in its investment portfolio. One must maintain an optimal asset allocation mix for their portfolio, best suiting their risk profile and investment horizon. 

3. Have a plan

When the captains come for the toss before the start of the match, they take inputs for the pitch conditions, ground conditions, weather conditions, own strengths, opponents’ weaknesses, etc. This allows them to make a considered decision about batting or bowling first if they win the toss. 

Similarly, one must have a clear plan to achieve their financial goals before embarking on the investment journey. Once one analyses their risk appetite, choosing a suitable investment option is easier. Instead of venturing into unknown territories, one must play to their strengths for a pleasant investment experience. 

4. Make the most of powerplay overs 

In a T20 match, the first six overs are the mandatory powerplay overs, wherein only two fielders are allowed outside the 30-yard circle. Batsmen usually aim to be aggressive in their batting approach and make most of these fielding restrictions. 

Similarly, when it comes to investing, one should always aim to have an aggressive approach during the early years of their investment journey. With lesser financial dependencies, this enables them to take higher risks, aiming to generate better returns. The investors may also benefit from the power of compounding with more time in the market. 

5. Take a strategic timeout periodically 

IPL allows the teams to have strategic timeouts at periodic intervals. The team players may stock the situation and discuss if they need any strategy changes for the rest of the match. Similarly, one must periodically review their investment portfolio to analyse the portfolio health and take corrective actions if required. 

Such a periodic review also enables the investors to measure the investment performance objective and see if their investment plans need any changes to achieve their financial goals in a time-bound manner. Just like IPL allows multiple strategic timeouts during single innings, such periodic reviews should also be a regular feature for the investors instead of just being a one-time affair.

So, while the cricket fans enjoy the IPL, the investors should make the most of these investment lessons and take a step ahead in their prudent money management plans.