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Did You Know These 6 Ways In Which Mutual Funds Are Similar To Cricket?

Now that the IPL has us all hooked on to our televisions, it is quite evident that despite unfavorable situations, cricket fever never dies down. What if we told you that mutual funds have the same kind of effect on investors as cricket has on its fans? A well-experienced captain takes calculated risks to enhance the team’s performance. Similarly, a professional investment personnel works in the best interests of their clients. Beginners might feel apprehensive about investing in mutual funds but the framework is not complex at all. We have listed 6 ways in which mutual funds are quite similar to the sport that Indians love the most. This should debunk the common myths around mutual funds.

1.     Diversification is the key

Cricket is a sport that requires various roles to come together and perform at their peak to be on the winning side. This is why, a successful team is diversified to fulfil all these roles. In a team of 11 players, some are batsmen, some are bowlers, one is a wicket-keeper and a couple of players are all-rounders. Have you heard of a team that has 11 bowlers? No, because without diversification, a cricket team will never succeed.

Similarly, in mutual funds, your portfolio needs to be diversified to maximize your profits and minimize your losses. Instead of putting all your money in one company share, it is wiser to strike a balance by investing in diversified shares so that one sudden loss does not ruin your entire portfolio.

2.     Start early

A competent team will always start aiming early to reach the winning score. A delay in scoring runs will simply increase the required run rate and a huge percentage of the score will remain to cover towards the end. Just like ignoring the first five overs is a huge mistake in cricket, similarly, ignoring early investment years makes you lose out on crucial gains.

Younger people who start investing in mutual funds can take it slow and steady without risking much. Patience is the key to grow your portfolio. However, people who start investing at a later stage, often opt for risky assets that end up making their finances unstable. Reckless investment in mutual funds is never a good idea.

3.     Conditions

In cricket, weather conditions and the subsequent pitch condition makes a big difference to how the game turns out and in whose favour. Similarly, in mutual funds, market conditions play a major role in deciding whether you are the winner or the loser for the day. To make the most of existing market conditions and to ensure that your portfolio is always safeguarded, Samriddhi takes strategic decisions while keeping you informed.

4.     Dependable players

In mutual funds as well as in cricket, there are a few all-rounders or dependable players that can run the whole show, if need be. In cricket, the all-rounders can bat and bowl well, thus adding to the team’s winning potential. Balanced funds, that have a fair share of both equity as well as debt investments, are like these players that are great for your portfolio.

5.     Goal-based

There are various types of cricket matches and each type requires a different skill-set. Players are selected and strategies are devised, depending upon the type of game that will be played. A one-day match has a different format from that of a 5-day test match.

Similarly, investing in mutual funds should be done on the basis of the client’s requirement. At Samriddhi, we talk to our clients at length, to understand their investment goals. Only after understanding whether he or she has a short-term, mid-term or a long-term goal, do we suggest the product, the time-frame and the mutual fund schemes.

6.     Every Run Matters

In cricket, each run is important to reach a winning total. Likewise, in Mutual Fund investments a sizeable corpus can be created by doing Monthly Investments (SIPs). SIPs are the best way to contribute small portions every month and with the help of Rupee Cost Averaging a large corpus can be created. SIPs are also a great way to reduce market risks and increase your total gains. Because of the Rupee Cost Averaging factor, you end up buying less in expensive market conditions and buying more in cheaper market conditions, thereby making it useful in both situations. Do you also want to make the most of rupee cost averaging? Then this is the right time to head over to Samriddhi Investment Services Pvt. Ltd where we have many exciting offers for you to start investing in SIPs.

Concluding Thoughts

We are sure that the next time you watch a cricket match, you will start noticing the details in between runs and understand how closely your favourite sport is related to the world of mutual funds. If you are new to investments, we could guide you to understand how to begin so that you become an informed and confident investor very soon.

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Koonal Jain

The writer of the above article is the director at Samriddhi Investment Services Pvt Ltd., A leading Financial Intermediary. He can be reached on [email protected]