Start your Financial Plan on the Right Foot
/2016-06-13 12:14:57
Nithin Sasikumar

With the Euro cup starting, it’s the season for football fans to treat themselves to one month of action. And we thought why not link some football terms with investing to make life simpler? So, here we break down football and investing.

Coach – This is someone who has been there and done that; someone who is experienced and brings a wealth of knowledge to the table. He is someone who understands the team and helps the team achieve its potential. Similarly, you need a financial coach who understands you and advises you on the best ways to create a winning strategy.

Game Plan – Before going into the game, the coach and the support staff analyses previous games of the opponents to come up with a strategy that is then discussed with the team captain to execute. This is the kind of strategy you need to set yourself.

Goal – There are no two ways about it. The very objective of the game is to pass the ball and reach/score the goal. In the same way, we need to set or have the vision of the goal we wish to reach and invest in different instruments to achieve this.

Team Selection – A diverse mix of players who play in different positions make up a football team. Selecting the best players in each of these positions will help in executing the game strategy and achieving a win. Asset allocation works in a similar manner, you need to make sure you have the right mix of securities/funds in your portfolio to achieve the goal.

Goalkeeper and Defenders – Their task is to keep the ball away from and protect the goal. In the

context of your portfolio, it is the job of your debt/fixed income instruments to counter any market

volatility and provide stable and steady returns.

Forwards – The players who often receive the most adulation because they’re the ones who score the goals – consistency and accuracy is required to maximize every opportunity to reach the goal. In your portfolio, that part is played by equity funds which will maximize your returns and through consistency and the compounding, ensure that you are able to achieve the goal.

Midfielders – The players entrusted with the responsibility of preventing the ball from going towards the defenders and passing it ahead constantly to the forwards. Often not given the attention they deserve, hybrid/balanced funds play a similar role in your portfolio. With a mix of both debt and equity, they seek to prevent a downside to the portfolio and also participate in an upside.

Substitutes – They may be on the bench awaiting their turn today but that does not mean they don’t have potential. Reviewing the performance of the on-field players constantly and making changes when they tire is necessary for the team’s optimal performance. In your portfolio, this means the financial advisor (coach) will have to review the asset allocation and the schemes/securities in the portfolio and make sure they are performing. If not, a substitution of the schemes with better ones may be required.

Now that you’ve made the links between football and investing, here’s to a happy Euro cup and happy investing.