The IPL is quite glamorous and glitzy. However, when viewed through the lens of cricket, it can teach us important lessons about money.
Here are five such suggestions from IPL to help you become better at managing your money.
Start Early: The powerplay rule in the IPL stipulates that only two fielders may remain outside of the inner circle during the first six overs. When it happens, the batting side seeks to score the most runs possible to get the game going faster. One may not be able to set a high goal or pursue a target if not enough runs are scored in the first six overs. In a similar vein, it's critical to start investing early. The sooner you get started, the more time you have to prepare and the easier it will be to reach your financial objectives.
Develop A Strategy: The most important lesson we can take away from T20 cricket is how to develop a strategy! You will concur that an IPL game's second half is more interesting than its first. This is due to the presence of a target that has to be pursued.
According to Chenthil Iyer, founder and chief strategist of Horus Financial Consultants, “This is precisely the same situation as purpose driven financial planning, where we help clients to set their financial goals at various stages of life and plan their investment strategy accordingly.”
Diversify Your Portfolio: A good team does not have 10 outstanding bowlers or 10 outstanding hitters. Instead, they have a good balance of all-rounders, bowlers, and batsmen. Even if one or two bowlers or batsmen have a particularly strong day, a team's success is ultimately a result of its collective efforts.
Similar to this, one should never put all of their money into one asset class, such as gold, real estate, debt, or equity. Instead, based on one's level of risk tolerance, the portfolio should contain the appropriate mix of asset classes. One shouldn't invest all of their money in stocks, even when the stock markets are doing really well. In a bear market, it is also not advisable to withdraw money from the markets.
Horses for Courses: Financial planning does not benefit from a one-size-fits-all approach. The Required Run Rate (RRR) is the only variable that is monitored during the run chase in T20 cricket, particularly in the IPL. This is reset depending on the number of runs yet to be scored and the number of remaining overs after each over. The strange thing about the needed run rate is that it changes since no team scores precisely the same number of runs every over.
“So, you may be wondering, what significance does such a number have? This rate really serves as a fairly accurate predictor of the level of aggressiveness required to pursue the target. In other words, it stands in for the danger that must be accepted. The batters must score aggressively to win the game even if they have to take the chance of losing a wicket if the RRR reaches eight runs per over, according to Iyer.
However, if the RRR is only four runs per over, they can play very carefully and pursue the target with the least amount of risk. Financial planning may also be monitored using a comparable RRR. The Required Rate of Return is what it is termed. This may be determined based on the sums necessary to achieve the specific objectives that are determined through the practise of thorough financial planning. This is how one develops their financial plan and their unique risk-return profile.
You require A Financial Coach: Even the finest players on a team require sound direction. Someone must also develop a plan. A coach is useful in this situation. Some of the most well-known IPL coaches are Tom Moody, Mahela Jawawardhane, and Stephen Fleming, who have all guided their teams to victory.
Similar to this, you need a coach or financial counsellor to help you reach your financial objectives. Additionally, it's critical to understand one's risk-return strategy and structure an investment portfolio that is appropriately diversified across a range of asset classes.
“This can be a challenging exercise in practise, so assistance from a trained professional may be required,” explains Iyer.