Mahendra Singh Dhoni (MSD), one of the most prolific and most successful Indian men’s cricket team captain announced his retirement from international cricket on 15th August 2020. He is the only captain to win all three major ICC trophies — the T20 World Cup in 2007, the ODI World Cup in 2011, and the ICC Champions Trophy in 2013. Under his captainship, the men’s Indian cricket team achieved major milestones like won Champions league 2010 & 2014, Asia Cup – 2010 & 2016, became the No.1 Test Ranking team from the year 2009-2011.
From a railway ticket collector to ending the game as one of the greatest players — everyone can plan their investment journey from Captain Cool’s journey.
Some of the qualities that helped him succeed on the cricket field can also be applied to one’s investment journey..
1. Keep Things Simple. MSD doesn’t try doing everything at once. Every task, whether daunting or menial, is broken into simpler ones. Then, each step is worked on. The chase in 2011 World Cup final is an example. He and Gambhir ran hard between the wickets and set targets for each over. This helped them get closer to the finish line by following the simple rule of cricket. MSD then made India cross the finishing line with a historic six.
Similarly, while planning your investment journey one must plan their investment journey by following simple investment rule.
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- Have 3 to 6 months money outflow as an emergency fund.
- Have Health insurance of Min 5 lac or at least equal to your annual income which is higher.
- Have Accident Permanent Disability cover of min 12 to 15 times of annual income.
- Have a Life Insurance cover of min 12 to 15 times of annual income.
- Max 35% to 40% of income should be your current standard of living expenses.
- 5% of your income should be allocated to emergency needs.
- 5% to 10% of your income should be allocated for short term needs
- 10% to 15% of your income should be allocated for retirement provision.
- EMI should not be more than 25% to 35% of your income.
- 5% to 10% of your income should be allocated for Child Education and Marriage.
- 5% to 10% of your income should be allocated for all kinds of insurance coverage premiums.
2. Dedicated Persistence: MSD has always been an expert in persistence and has led by example, even motivating the younger players to outperform their seniors remarkably. He always tells younger players that, devote yourself to your strength and then be focused on that.
In the same way, divert your investment towards your financial goals and remain focus until you achieve your financial goals. Invest regularly without worrying results you are getting during your financial journey until you reach the goal.
Just like cricket, the investment market is unpredictable. If an investor puts all his eggs in the equity basket then with fluctuating returns, the investment ride could turn out to be very bumpy. On the other hand, putting them in the debt basket could result in payable interest amounts that would make the ride completely tragic!
Pulling out investments from one type of market to invest in another, time, and again will always bring the poorest return on sales and in turn costliest purchase of assets. Thus, an investor must invest time in decision making, picking the right investments, carefully assessing each option like a captain assesses his squad, and then persistently give them ample time to bring returns.
3. Captain Cool: One of the most characteristic traits of MSD is how calm he remains, even in the tensest situations. This has awarded him the title of ‘Captain Cool’. The sheer relaxed aura MSD emits under the most pressurizing times not only relieves his teammates of any tension but also assures the fans that when MSD is around, the team won’t buckle down without a fight.
Such controlled behavior can be vital for getting a better outcome from your investment. Warren Buffett too vouches for this motto and believes that an investor should never lose his cool, no matter what the situation.
Your investment in various factors like your risk-taking ability, the time horizon of your financial goal, your job stability, etc. factors. Whether it’s a job loss or a sudden market crash, you have to remain composed while handling your investments. If one stock of yours does not perform well, don’t panic. You will always have the option to switch it considering your financial goals.
4. Calculative Thinking: MSD has always been a risk-taker, though he has never done anything reckless or without calculation. For example – He would send a spinner on a well-groomed field or hold back a pace bowler on a rough one. This calculative thinking has always bought success to India and is something that must be practiced by investors as well.
The investor must ask the following questions while making any investment.
- Why I am investing money?
- How I will get the amount of money I need after a particular time?
- What should I do for getting the desired money in desired time?
After getting all the above question’s answers one must invest in any asset class like Fixed deposit, Stocks or Gold, etc. Investors should take risks only when the odds of profitability over losses are overwhelmingly in their favor. They must closely evaluate the performance of their investments and then plan the purchase or sale. An investor may discard the underperforming options and invest in other stronger performing options after calculating all probabilities.
5. The Finisher: MSD is saluted for his amazing finishing ability to hand India the win. During his innings, one can notice that he starts slow in the beginning, stealing a few singles with rarely any boundaries. Towards the end of the game, MSD cut loose and goes for the big shots to win the match. It is for this reason that he has been sought after as one of the best finishers in cricketing history as his main goal to win the game for India.
Same way investors should focus their financial goals and allow their investments to perform normally and then increase the pace with time. A young investor can take the risk of investing in risky assets like equity, but he must give them time to perform. Also, even if the market tumbles down, his equity basket can flourish with time. Hence investors should play on like MSD during the beginning of their innings. Once they start getting closer to retirement, they must reduce taking risks and invest in fixed income assets so as to enjoy a comfortable retired living.
6. Respect Your Limitations: MSD, though being an impressionable batsman always holds his ground by sticking to what he knows best: Wicket-keeping. He never attempts to push himself up the ladder or pull out a well-performing batsman just so he could show off his skills. Such an attitude reveals an impressive trait of his – A man well aware of his limitations, who builds his strengths instead of pushing ahead his weaknesses.
Investors too should follow this trait by evaluating their strengths and working towards building them. In the words of Warren Buffett, ‘Know and invest within one’s circle of competence’. Investing in sectors where one has no knowledge is just a financial disaster in the making. Too much self-confidence, overestimation, taking investing lightly, and doing everything all by yourself, are traits which one should avoid while entering into the investment market.
Hiring an investment advisor or financial coach is a good idea to help broaden your horizons. This is because an investment advisor can do much of the above-mentioned activities for an investor just like a coach does for his team players.
Happy Reding!!!
Viralkumar Shah (CERTIFIED FINANCIAL PLANNER CM)
Financial Happiness & Wellness Coach