Financial Planning Vs T20 Cricket...

(The author is the Founder and CEO of Money Avenues, a Wealth Management firm based in Chennai which offers   i.S.M.A.R.T financial plan. Feedback can be sent to ismartfp@ gmail.com)



8 reasons why T20 Cricket and Financial Planning are similar...

T20 cricket is no different from Financial Planning. Fast paced, uncertain, little time to achieve, limited resources and most importantly, winning the game. Our lives can also be equated with this T20 evolution in the sense that our lives too have evolved drastically.


Let's look @ 8 points what financial planning lessons can be learnt from T20 cricket:


1. Game Plan:

Let's get it straight; T20 is all about precise game plan and teams don't win matches by sheer luck as it's appears. Every ball which is being hit and every ball being bowled is planned for the simple reason that teams have only 120 balls to bowl and 120 to bat and the match has to be won within that... So is the case with our financial life. We have big financial goals and objectives with very little time on hand. That requires a sound financial plan to make one a winner in his/her life. It's all abut game plan.



2. Run rate matters from the start:

Like in a T20, life is filled with run rates... Limited time to achieve too many things... Children education, foreign holidays, new home, retirement plan etc., Time and money is very limited, hence the importance of achieving the desired run rate (returns in our case). 

• Story of 3 friends aged 30: 

They invest 1 lac each and meet after 20 years...


Mr. Cautious invests at the age of 30 years @ 9%
Mr. Responsible invests at the age of 35 years @ 12%
Mr. Fun invests at the age of 40 years @ 15%


@ 50 years...


Mr. Cautious has made  5.61 lacs @ 9% 
Mr. Responsible made   5.47 lacs @ 12%
Mr. Fun has made       - 4.04 lacs @ 15%


If you look at the results, you would be astonished...
Mr. Cautious has made most money among the rest though he earned the lowest returns in the group. But what made him as the winner is, he started early on in his life. On the other hand, Mr. Fun got the highest returns, but started very late in his life.... Power of Compounding worked very well for Mr. Cautious.




3. Right choices of Ps (player/product):

T20 in India is all about getting the right players in the right winning combination. Once that's done, the rest is on the field. Financial life is all about getting into the right products which can ensure our financial future. 


http://mymoneyavenues.blogspot.in/2012/04/one-compelling-reason-to-manage-your.html


The above link shows how people can benefit financially by choosing the right investment avenue with the limited resources.




4. Importance of Coaches:

T20 is all about having great winning coaches. Though the T20 format looks very fun loving, it's a serious business. And that's why we see the best coaches in the cricket business getting drafted into T20 league. Financial planning is all about having good coaches to assist people on formulating financial goals and prepare a financial plan to achieve those goals.




5. Fast faster fastest...:

Our life is as fast as a T20 game and even before we could realize the game is over... Such is our lives that we find very little time to plan for our financial future; but we have ever growing goals and aspirations for our future. We are largely focus on earning wealth.. But the critical component is to create more wealth out of the earned wealth. 




6. Hero there/zero here and vice versa:

We have seen many heroes of ODIs and Test formats turning zeros in T20 formats. Many zeros in ODIs and tests have turned heros in T20. Many of us are hugely successful in our careers and professions, but that may not be the case with our financial planning and there are many reasons for that. Our success in careers need not translate into successful financial life.




7. Make the most out of resources:

Resources in T20 are limited and they have to be optimally utilized. For eg., A best bowler can bowl only 4 overs. Same is the case with our lives. We have limited resource, limited time frame but unlimited goals; we need to optimally utilize it for our financial future. For eg., If I have Rs 1 lac to invest., I can either keep it in bank a/c which gives me 6% or I can choose to invest in an avenue which can give 15%. This is one way to look at optimizing resources. 


8. Defensive and Offensive game play: Protection and creation

T20 is all about the judicious mix of defense and offense, though it is widely popular for exotic shots and scores. One has to protect wicket when it is required and offend when needed the most. Same is the case with our lives. We need to first protect our and our family's interests against uncertainties. Also that we need to go for long term wealth creation for a bright financial future. Any one strategy alone will not yield the desired results both in T20 and our lives.





(The author is the Founder and CEO of Money Avenues, a Wealth Management firm based in Chennai which offers   i.S.M.A.R.T financial plan. Feedback can be sent to ismartfp@ gmail.com)

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