What are the 5 Investing Lessons You Could Learn From FIFA World Cup 2018?
The World Cup is in full swing and so far, it has not disappointed! It could be one of the best yet. Besides the fact that the World Cup is a huge sporting event watched by half the world’s population, it’s also a good place to find investing inspiration. You can take important cues on investing from the strategies adopted by the football teams. After all, managing money and playing professional soccer does use some strikingly similar skills.
Here are 5 important lessons you can learn from the way the successful teams play the beautiful game.
Set your goals
Before the start of a match, the team always plans their strategy. The team which scores the highest number of goals wins the match. Similarly, while investing, you should have your goals in mind. Most investors set retirement as the main goal. In fact, planning for retirement should be one of your first goals when you start investing. The journey towards the retirement goal consists of two phases – first is the accumulation phase, where you need to save money and the second is the distribution phase, where you plan to get monthly income till your life expectancy age.
Find a good manager
No professional soccer team plays without a manager. A manager’s presence is of utmost importance, to bring players of various talents together and help them perform as a team. The team also relies on his words of motivation and changes its strategy when the game is in progress. Likewise, when it comes to managing your money, it’s best to rely on the expert advice of your financial planner. If you do not have the time to track all market activity yourself, rely on his expertise and watch your money grow.
Have a right mix of assets
A successful team needs top players in all positions; defenders, mid-fielders, strikers, and even a strong back up of reserve players on the sidelines. While a few exceptional players can decide a game, even they could simply have an off day. When it comes to investments, holding a diversified portfolio of assets is incredibly important, to help you get maximum returns. Build your portfolio to reap the benefits of diversification. Pairing traditional and non-traditional assets, risky stocks and defensive bonds, and allocating across alternative investments is crucial in making portfolios profitable in good times and to preserving gains during downturns.
Strategy – sometimes defensive and sometimes offensive
Football is as much about employing the right strategy as much as it’s about skill. A football team which sticks only to playing only defensive or offensive, are less likely to go a long way. The strategy needs to be changed as per the conditions and the opponents. Similarly, when it comes to your financial portfolio, you need to ensure you rebalance your portfolio when needed. In short, rebalancing is a long-term investment strategy which focuses on asset allocation across financial instruments and asset classes keeping in mind your risk-return needs and helps you counter the market volatility. do proper research and upgrade your knowledge on a regular basis. Never panic when there market volatility and correction and do not make choices randomly.
Play your substitutes
Teams change under-performing or tired players midway through the game even if they have a great reputation. This gives an impression of how and when you should review and be prepared to change your investment strategy from time to time. It is one of the hardest decisions an investor can make — how long to ride the winners or how long to hold onto a loser. You have to know when to shake things up. Investors who refuse to sell a loser, thinking it will come back, may get too emotionally attached to a position.
You should always be cautious about your investments if any of the schemes do not perform well over a period of time, you should ideally switch the investment to another better-performing fund. To acknowledge funds’ performance, you should review them every quarter or semi-annually.
Even the most experienced teams risk their game plan when time is running out. And the coolest forward might miss a simple shot or a penalty under pressure. The teams who can control their nerves and stick to their tactics for the entire 90 minutes (or longer) have a greater chance of success. Investment decisions are similar. In most situations, staying calm pays off and having a proven investment process at hand, with the ability to stay focused on the investment objectives can deliver a big difference for an investor’s long-term ability to optimize returns.
It’s not over till, it’s over (start now):
There’s one thing about football, which every player and fan knows: that it isn’t over until the final whistle is blown. So like them, even if you’ve never really bothered much about your finances before, it’s not too late. You can start right now, and try and regain as much as lost ground as possible. Some wait till their 40s before they start planning for their retirement, and even if you are one of them, don’t worry. You can still work on your finances, now matter how late.