The FIFA World Cup just ended on a tremendous high and the world is yet to get over the hangover. Fans from all over the world were treated to a display of high quality football and the shocks and surprises during the world cup could rival that of any Hollywood thriller. Along the way, there were victories, defeats, exclamations of happiness, tears of disbelief and a lot of life lessons. In fact, you can also find a few nuggets of wisdom when you see it from the investment perspective.
Here are a few investment lessons you can learn from football.
1.Select the right composition of players
A football team consists of defenders, midfielders, strikers and a goalkeeper. Only when you have different players filling these different roles, can a team hope for success. For example, imagine if you fielded a team that consisted only of strikers. The team may be extremely aggressive but what if the ball goes to other half? The opposition team would find it very easy to score goals.
Similarly, your stock portfolio should consist of a right mix of equity, debt and hybrid funds. Having only equity funds might seem like a good option if you want high returns. But in case of a market crash, you could lose all your money. That’s why, diversification is a great way to minimize your risk and earn good returns.
2.Star players can boost your team
Portugal has Ronaldo, Argentina has Messi and France has Mbappe. Every team has a star player that delivers high performances on a consistent basis. In fact, managers often build the rest of the team around these players to get the best results. When it comes to investments, you need to have a few quality investments at the core of the portfolio.
These investments can help you earn good returns when the markets are good and they can hold your portfolio together and minimize losses when the markets underperform. But overdependence on your star players can be hurtful too (like in the case of Messi in the Argentina team). You need to find a good fit of investments that complement your core assets in your portfolio.
3.A good manager can make a big difference
Alex Ferguson was the manager of Manchester United for 26 years. During that time, the team won a total of 38 trophies. But once he left, the team’s performance nosedived. That’s because a good manager has a 360-degree view of the entire game. He identifies a way to get the best out of his team.
When it comes to investments, a fund manager can be crucial to the performance of a mutual fund. Always conduct a background-check of the manager before you invest in any mutual fund. Check what funds he has handled and how they have performed. This can help you make better decisions regarding your funds.
4.Develop a playing style that suits your team
Once the team is selected, the coach devises a playing style that suits the different personalities in the team. Similarly, as an investor, you may be more defensive or aggressive based on your risk appetite and financial goals. So once you identify your investment profile, you should create a portfolio that suits you.
A team starts preparing for the next world cup just as the previous one ends. Only when you have a long term goal for your team, can you hope to lift the trophy one day. Similarly, you need to have a long term vision for our investment portfolio. Look ahead and steadily build a portfolio that can help you meet your financial goals comfortably. This way, you can achieve success in the arena of investments.