There is no greater joy, than watching a game of football on TV. There is never a dull moment. The ball moves across the football pitch in seconds. Time to fill up your snack bowl, get a hot cup of tea and watch the beautiful game. You enjoy every second of the match, screaming with joy, every time your favorite team scores a goal.
Yes… Football is a great game…But what has football got in common with investing?
More than you know it seems.
You must have heard of great footballers, like Swedish striker Zlatan Ibrahimovic and Portuguese superstar Cristiano Ronaldo. These great footballers started their careers at a very young age. They went on to become some of the greatest football players, the World has ever seen.
Investing is not much different from football. You got to start young. The earlier you start investing, greater are the chances of you, attaining your financial goals. This is because of a magic tool called compounding. With compounding, you earn interest on interest.
Start investing early and enjoy the power of compounding.
Football is all about taking calculated risks. Last minute substitutions. Penalty shootouts. You see calculated risk at its best. The Netherlands vs Costa Rica World Cup quarter finals at Brazil 2014, was goalless and heading for a penalty shootout. In a master move, Dutch coach Louis van Gaal, substituted regular goalkeeper Jasper Cillessen, with the substitute goalkeeper Tim Krul. After mind games by Tim Krul, some of the Costa Rican players missed crucial penalties. This calculated move made the Dutch, winners of the game.
Investing in equity, is similar to taking calculated risks in football. You need to do your research to turn out a winner in your equity investments. An investment in equity means, you get higher returns for taking higher risks.
Investing in equity rewards the risk takers.
You have bought a number of schemes of different equity mutual funds. Can you just leave them idle, without a care to monitor and review their performance?
You need to periodically review your investment and make corrections in your equity portfolio, to get profits.Add winners to your equity mutual fund portfolio and weed out the losers. This is the path to riches. You must have watched the semi final of the Brazil vs Germany, World Cup in Brazil 2014. Brazil who were strong favorites to win the World Cup, had a shocking 7-1 defeat.
Why did Brazil lose? Brazil had a weak defense and did nothing to plug its weakness. It paid for this wrong strategy, with a heavy loss.
Monitor your equity portfolio and correct any weaknesses you see.
Football is all about fight backs. The game is never lost until it is lost. We go back to the World Cup in 2006 in Germany. A thrilling match between Australia and Japan. Despite trailing Japan 1-0 for most of the match, Australia won the match, when 3 goals were scored by them in 8 minutes. Australia won the match 3-1.
Your equity investments are no different. Even if the stock markets crash, they are known to bounce back. As long as you stay invested in equity for the long term, a bounce back is possible, no matter how volatile the stock market is, in the short run.
Don’t time the market. Spend time in the market.
You have now learnt, how similar football is to making an investment.
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