Money lessons from the game of cricket

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1. Don’t step out into the field without protective gear
Tip: Before you start investing, secure yourself against the risks to finances, life and health. An emergency corpus, a health cover and a life insurance are a must to safeguard your and your family’s financial interests.
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2. Stay put for the long haul
Tip: Legendary knocks require grit and patience to tide over turbulent phases. Equity investors should invest for the long-term and not be perturbed by short-term volatility.
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3. Don’t bank on a single player
Tip: Experts advise against focusing on a single sector as it leads to concentration risk. Focusing on sectoral funds can both lift as well as sink your portfolio. Spread your bets to mitigate the risk quotient.
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4. Communicate well
Tip: Keep your family members, especially your partner, informed about investments and insurance. This will help them take charge of financial matters if you are in any way incapacitated.
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5. Keep the asking run rate in check
Tip: Late start means investing a lot more to build the same corpus. Early start can help achieve long-term goals such as retirement or children’s higher education relatively easily.
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6. Follow the rules of the game
Tip: Pay your credit card bills and EMIs regularly to avoid poor credit scores. File tax returns on time to avoid penalties.
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7. Read the googlies carefully
Tip: A clever salesperson can sweet talk you into making bad investment choices. Asking for the internal rate of return (IRR) of a financial product is a smart way to avoid sub-optimal investments.
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8/10
8. Build your innings steadily
Tip: Don’t put off investing till you have a ‘large’ surplus. Start small and increase your investment when the situation permits. SIPs in mutual funds are a smart way of achieving financial goals through small-ticket, regular investing.
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9. Being overly defensive doesn’t pay
Tip: Investing in equity is the best way to earn decent, inflation-adjusted returns. Don’t shy away from equity, especially if you want to meet long-term goals.
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10. Imbalanced team can lead to losses
Tip: Going overboard on equity in the hope of high returns or playing ‘safe’ and investing in just debt can lead to sub-optimal returns. Consider your age, risk appetite and the goal horizon to decide the asset allocation that suits you best.
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