Financial Lessons from Football

From portfolio allocation to fund selection to navigation volatility, there is a lot one can learn about financial planning from Football.

Don’t focus too much on Forward – The responsibility of forward players is to be aggressive and score goals for their teams. But forwards alone can’t win matches. An aggressive investment strategy focusing on mid-cap stocks or mutual funds can be rewarding in a bull run, but beware of their equally quick meltdown when the market falls. High returns come with high risk. Rely on asset allocation based strategy.

Don’t ignore Mid-fielders – Mid-fielders can both attack and defend, depending on the match situation. Investing in all-rounders like balanced funds brings stability to one’s portfolio. Balanced funds create scoring opportunities by investing in equities, even as they cushion the impact of market downturns by investing in debt.

Beef up your defence – Defenders are responsible for not allowing the ball go past them. They prevent losses. Limiting your losses by boosting your defence against sharp market corrections is as important as creating scoring opportunities.

Be watchful of market feints – Feints are deceptive movements of a player meant to confound opponents. Reading market movements during volatile phases can be tricky and is fraught with risk.

Adopt a Goal oriented approach – Ultimately, it is the goals that decide the winner. Linking your investments to financial goals is fundamental to financial planning. List out goals and their time periods and invest accordingly. Experts suggest investing primarily in equities for long term goals and in debt for short term goals.

Take stock at Half time – The break after 45 minutes of the game allows teams to refresh and re-strategize. Reviewing your portfolio regularly is integral to sound investing. Review and rebalance your portfolio every six months. If the equity component has risen in value, make incremental investments in debt and to maintain your preferred asset allocation ration.

Act as a referee for your investments – A neutral official on the field, the referee enforces rules and hands out punishment to players, if required. Arrive at decisions dispassionately, instead of letting emotions take over, particularly in a volatile market.

Do not commit fouls while investing – Breaking the rules of the game is termed as foul and invites punishment. Resist the temptation to stray away from your financial plan. Deviating from rules based investing can compromise your goals. Do not liquidate your investments made for specific goals to finance short term needs.

Make the most of penalty shootouts – Penalty kick is an easy scoring opportunity for the team to which it is awarded. If you are beneficiary of a joining or a performance bonus, channel it towards achieving your financial goals. The money is deservedly yours, don’t fritter it away. Use lump sum windfall gains to create an emergency fund, pay off loans or enhance term and health insurance covers.

Avoid getting the Cards – A yellow card by the referee denotes warning and a red card leads to the player being sent off the field for violating the rules of the game. Do not hide your capital gains from tax authorities. You might end up paying more otherwise.

The Celebration of Wall Fall

Yesterday was the 25^th anniversary of the fall of the Berlin Wall, an act that symbolized the end of tyranny and oppression that kept people apart. Communist government of the German Democratic Republic in 1961 built the wall. The purpose of the wall was to keep western “fascists” from entering East Germany and undermining the socialist state. In 1989, ecstatic crowds swarmed the wall and crossed the border. Many people met their families after a long time. To this day, the wall remains one of the most powerful and enduring symbols of cold war.

After the World War II, German Territories divided into two parts. The Eastern part of the country went to the Soviet Union and the western part went to the United States, Great Britain, and France. In 1949, Russians began to move in Western part out of the city for good. Western countries supplied goods and commodities to their allies in East from the Air. This was called as Berlin Airlift. In 1961, Eastern Government gave permission to stop the flow of emigrants by closing its border. Within two years, a concrete wall was built, which divided the city into two parts.

Many people died in practice of crossing the border. However, in 1989 people tried to cross by hot air balloons, crawling through the sewers, and driving through unfortified parts of the wall at high speeds. On November 9, 1989, East Berlin communist party leader announced a change in his city’s relation with the west. Start at midnight, more than 2 Million people from East Berlin visited West Berlin and met their families and friends. Their joy of going back to their old places was termed as the greatest street party in the history of the world. Yesterday, people and celebrities performed at concerts and celebrated the anniversary. They performed Wall Anthem Heroes and display fireworks.

There are many other walls or boundaries around the world, which were built after big wars to restrict people from crossing the country. India-Pakistan border fence is one among them. In August 1947, partition was done between India and Pakistan. Overnight, people lost their families and jobs. Border wall in Israel-Palestine is another barrier. US-Mexico border tries to keep illegal migrants out of country. Border between North Korea and South Korea is a cold war symbol in Asia. Saudi Arabia border with Yemen, Iran-Pakistan Border, Northern Ireland peace lines, China great Firewall and Western Sahara wall keep people out of their country.

These walls not only restrict people but also give birth to terrorism. This collapse would lead to demolition of barriers everywhere and healing schisms. The celebration for fall of Walls around the world will be immense if it happens. Many people will have joy to visit their homes, streets, meet friends, and families. Still there are people who are away from their homes because of the borders disputes and restrictions in going into other countries. Germany Berlin wall fall remains fresh on the minds.