Musings
Investing Lessons from Sports
This edition is dedicated to the entire sports fraternity and the indomitable spirit of all the sports persons/athletes contesting in various sporting events taking place across the world. Life of sportspersons is very hard with many sacrifices, physical pain and emotional turmoil being part and parcel of their journey. All of us admire sportspersons across various sports and it is quite interesting to draw parallels between the world of sports and investing.
Starting early makes a world of difference
Most acclaimed sportspersons embark on their sporting journey at a very young age. While they may have become household names in their 20s or 30s, most of them, would have taken up the sport even before they had turned 10.
Starting early gives them ample time to hone their skills in a particular sporting discipline. Rarely does one come across a player who started playing a sport, just few years before succeeding at the national or international level. Likewise, as an investor, starting early makes a world of difference to your investment corpus. The power of compounding allows investments to grow exponentially over time, increasing the likelihood of achieving the long-term goal.
Small Differences with Big Consequences!
A missed catch or a minor instance of mis-fielding or even a quick single not taken in a cricket match can prove crucial and change the end result. A few unforced errors can prove costly in a game of tennis.
Similarly, small differences can have big impact in the world of investing too. We all have heard about power of compounding, but not many truly understand its importance.
Raj who is currently at age 60 started his SIP of Rs10,000 when he was 35-year-old, on 1st July, 1999 till 1st June, 2024 his corpus at retirement was Rs. 2.63 Crore* and Amount Invested was 30 Lakhs.
Rohan who is currently age 60 started his SIP of Rs.10,000 at age 45 (a 10-year delay) and continued till age 60, from 1st July 2009 till 1st June 2024 he is likely to have a corpus of just under Rs. 54.31 lakh* and Amount Invested was 18 Lakhs.
See the magic of compounding! Start sooner to save more.
*Return for the above illustration is calculated using the XIRR return for SIP amount of Rs 10,000 from 1st July, 1999 – 01st June, 2024 (25 Years), invested at the beginning of the month for Benchmark: Nifty 50 TRI – 14.77%. and from 1st July,2009 – 01st June, 2024 (15 Year), invested at the beginning of the month for Benchmark Nifty 50 TRI – 13.65%. The above Illustration is for illustrative purpose only and should not be construed as a promise on minimum returns and safeguard of capital. SIP - Systematic Investment Plan. Past performance may or may not be sustained in future and is not a guarantee of any future returns.
Most people focus on how much they earn every month or how much they save but not so much on where the savings are to be invested and for how long. Equities are an essential component of an investor’s overall portfolio, which can give a boost to the overall returns. It may make a small difference to the portfolio returns in a year or two, but that can have a large impact on wealth
creation in the long term. Small differences could have big consequences. Depending on your risk appetite and investment horizon, you could consider investing in equities through equity oriented mutual funds, and more importantly, start early and stay invested for a long term.
Do not give up in the wake of adversity
Setbacks are common for every sportsperson, and this is true even for champions. The best batsman in the world can be out-of-form in a particular series. There are many examples of athletes, who at the peak of their career, faced injury crisis. However, the mark of true champions is to never give up even during toughest of times and emerge victorious. Quitting is the easiest option, but is hardly the best one from a long-term view, be it sports or investing.
Building wealth requires discipline of staying invested in the market, even if one encounters disappointment in the short run. Exiting prematurely can derailone’s long term financial goals. To simplify this statement, let us assume we had invested in the BSE Sensex Index on January 1, 1990 and stayed invested till March 28, 2024. The compounded annual return would have been 14.18%. Out of the total time period of 12505 days, what if we had missed 10 best days? Does not sound like a big impact?
Let’s take a look at the graph below, which simply highlights the impact on our returns had we missed 10, 20, 30 or even 40 best days:
Many a times, investors tend to exit equities after sharp downswings in market and wait on the side-lines for the perfect time to invest. More often than not, they miss the bus. Ability to accept disappointment in the short run is necessary to have a fruitful investing journey in the long run.
Daily returns from January 1, 1990 to March 28, 2024.
Source: Internal Calculations based on Data procured from www.bseindia.com
Patience is the key!
There are many examples in the history of sports where one had to wait for years to achieve success. There are even players who have made their debut for their country past their prime. Not giving up and waiting patiently are core values of sportsmen’s spirit,
Same holds true for investing. Consider the case of HDFC Flexi Cap Fund, which began its journey on 1st January 1995. A SIP of Rs. 10,000, on the first business day of every month since inception, would have created a wealth of Rs. 18.56 crores^ as on 31st May, 2024. Sounds so easy, but this long journey is not without hurdles and setbacks that could have made one quit at inopportune times. The journey saw various events, good and bad, that would have led emotions to take over one’s investment decisions. A case in point is the phase of Global
Financial Crisis, where markets saw a sharp fall of over 50%. Any nervous investor who would have redeemed his investment would have failed to achieve his financial goals. An investor who maintained discipline during the entire journey is the one who would have sailed through these events and reached his goal.
^ Past Performance may or may not be sustained in future and is not a guarantee of any future returns.
No substitute for emotional strength
Any sportsperson will vouch for the fact that mental strength is as important as physical strength. All of us frequently hear that key matches/races are often won/lost in the mind. Focus, resilience and ability to cope under pressure - all play a critical part in the eventual outcome.
We have witnessed countless football or hockey matches where a team, which had performed flawlessly till then, crumbled under pressure in the last few minutes of a knockout game. Successful investing requires mental strength too. You are constantly subjected to a lot of noise in the financial markets but staying focussed and keeping emotions in check is imperative. Just like a player losing his cool and getting a red card in football can land his team in trouble, an investor losing his cool and reacting in a knee-jerk manner can throw a sound financial plan into disarray.
Right guidance can do wonders
Can you name a sport where a coach/mentor is not required? Think hard!! Can’t think of any? Well, there isn’t any such sporting discipline where coaching is not required. While there may be some athletes who are innately more talented than others, they still require a coach/mentor.
In fact, in many sports, players have a coach/mentor at all times, even till their last professional game. Just like a sportsperson’s coach, a financial advisor can play a pivotal role in the pursuit of wealth creation. A trusted financial advisor can help devise a financial plan as per investor’s unique circumstances and financial goals. The advisor can hand hold the investor during challenging times and guide him in the right direction. Having a better understanding of the financial markets and years of experience means that financial advisors can become pillars of strength for investors in their pursuit of financial freedom.
HDFC MF/AMC is not guaranteeing/offering/communicating any indicative yield or guaranteed returns made in this scheme. The views expressed herein are based on internal data, publicly available information and other sources believed to be reliable. Any calculations made are approximations, meant as guidelines only, which you must confirm before relying on them. The information contained in this document is for general purposes only and not an investment advice. The document is given in summary form and does not purport to be
complete. The document does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. The information/ data herein alone are not sufficient and should not be used for the development or implementation of an investment strategy. The statements contained herein are based on our current views and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Past performance may or may not be sustained in future and is not a guarantee of any future returns.
SIP Performance - HDFC Flexi Cap Fund - Regular Plan - Growth Option
SIP since inception* of . 10,000 invested systematically on the first business day of every month (total investment .35.30Lakh) in HDFC Flexi Cap Fund would have grown to ~ . 18.55 crore by 31st May, 2024 (refer below table).
CAGR returns are computed after accounting for the cash flow by using XIRR method (investment internal rate of return). The above investment simulation is for illustrative purposes only and should not be construed as a promise on minimum returns and safeguard of capital. SIP - Systematic Investment Plan. Since Inception Date = Date of First allotment in the Scheme / Plan.
*Inception Date: January 01,1995. The Scheme is managed by Ms. Roshi Jain since July 29, 2022. #NIFTY 500 (Total Returns Index). ## NIFTY 50 (Total Returns Index). Since Inception Date = Date of First allotment in the Scheme / Plan. As NIFTY 50 TRI data is not available since inception of the scheme, additional benchmark performance is calculated using composite CAGR NIFTY 50 PRI values from January 1, 1995 to June 29, 1999 and TRI values since June 30, 1999.
Notes common to all tables:
Past performance may or may not be sustained in future and is not a guarantee of any future returns. Returns greater than 1 year period are compounded annualised (CAGR).Load is not taken into consideration for computation of above performance(s). Different plans viz. Regular Plan and Direct Plan have different expense structures. The expenses of the Direct Plan under the scheme will be lower to the extent of the distribution expenses/commission charged in the Regular Plan. Returns as on May 31, 2024. The above returns are of Regular Plan- Growth Option.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
Did you find the article interesting?
1
2
3
4
5
This edition is dedicated to the entire sports fraternity and the indomitable spirit of all the sports persons/athletes contesting in various sporting events taking place across the world. Life of sportspersons is very hard with many sacrifices, physical pain and emotional turmoil being part and parcel of their journey. All of us admire sportspersons across various sports and it is quite interesting to draw parallels between the world of sports and investing.
Starting early makes a world of difference
Most acclaimed sportspersons embark on their sporting journey at a very young age. While they may have become household names in their 20s or 30s, most of them, would have taken up the sport even before they had turned 10.
Starting early gives them ample time to hone their skills in a particular sporting discipline. Rarely does one come across a player who started playing a sport, just few years before succeeding at the national or international level. Likewise, as an investor, starting early makes a world of difference to your investment corpus. The power of compounding allows investments to grow exponentially over time, increasing the likelihood of achieving the long-term goal.
Small Differences with Big Consequences!
A missed catch or a minor instance of mis-fielding or even a quick single not taken in a cricket match can prove crucial and change the end result. A few unforced errors can prove costly in a game of tennis.
Similarly, small differences can have big impact in the world of investing too. We all have heard about power of compounding, but not many truly understand its importance.
Raj who is currently at age 60 started his SIP of Rs10,000 when he was 35-year-old, on 1st July, 1999 till 1st June, 2024 his corpus at retirement was Rs. 2.63 Crore* and Amount Invested was 30 Lakhs.
Rohan who is currently age 60 started his SIP of Rs.10,000 at age 45 (a 10-year delay) and continued till age 60, from 1st July 2009 till 1st June 2024 he is likely to have a corpus of just under Rs. 54.31 lakh* and Amount Invested was 18 Lakhs.
See the magic of compounding! Start sooner to save more.
*Return for the above illustration is calculated using the XIRR return for SIP amount of Rs 10,000 from 1st July, 1999 – 01st June, 2024 (25 Years), invested at the beginning of the month for Benchmark: Nifty 50 TRI – 14.77%. and from 1st July,2009 – 01st June, 2024 (15 Year), invested at the beginning of the month for Benchmark Nifty 50 TRI – 13.65%. The above Illustration is for illustrative purpose only and should not be construed as a promise on minimum returns and safeguard of capital. SIP - Systematic Investment Plan. Past performance may or may not be sustained in future and is not a guarantee of any future returns.
Most people focus on how much they earn every month or how much they save but not so much on where the savings are to be invested and for how long. Equities are an essential component of an investor’s overall portfolio, which can give a boost to the overall returns. It may make a small difference to the portfolio returns in a year or two, but that can have a large impact on wealth
creation in the long term. Small differences could have big consequences. Depending on your risk appetite and investment horizon, you could consider investing in equities through equity oriented mutual funds, and more importantly, start early and stay invested for a long term.
Do not give up in the wake of adversity
Setbacks are common for every sportsperson, and this is true even for champions. The best batsman in the world can be out-of-form in a particular series. There are many examples of athletes, who at the peak of their career, faced injury crisis. However, the mark of true champions is to never give up even during toughest of times and emerge victorious. Quitting is the easiest option, but is hardly the best one from a long-term view, be it sports or investing.
Building wealth requires discipline of staying invested in the market, even if one encounters disappointment in the short run. Exiting prematurely can derailone’s long term financial goals. To simplify this statement, let us assume we had invested in the BSE Sensex Index on January 1, 1990 and stayed invested till March 28, 2024. The compounded annual return would have been 14.18%. Out of the total time period of 12505 days, what if we had missed 10 best days? Does not sound like a big impact?
Let’s take a look at the graph below, which simply highlights the impact on our returns had we missed 10, 20, 30 or even 40 best days:
Many a times, investors tend to exit equities after sharp downswings in market and wait on the side-lines for the perfect time to invest. More often than not, they miss the bus. Ability to accept disappointment in the short run is necessary to have a fruitful investing journey in the long run.
Daily returns from January 1, 1990 to March 28, 2024.
Source: Internal Calculations based on Data procured from www.bseindia.com
Patience is the key!
There are many examples in the history of sports where one had to wait for years to achieve success. There are even players who have made their debut for their country past their prime. Not giving up and waiting patiently are core values of sportsmen’s spirit,
Same holds true for investing. Consider the case of HDFC Flexi Cap Fund, which began its journey on 1st January 1995. A SIP of Rs. 10,000, on the first business day of every month since inception, would have created a wealth of Rs. 18.56 crores^ as on 31st May, 2024. Sounds so easy, but this long journey is not without hurdles and setbacks that could have made one quit at inopportune times. The journey saw various events, good and bad, that would have led emotions to take over one’s investment decisions. A case in point is the phase of Global
Financial Crisis, where markets saw a sharp fall of over 50%. Any nervous investor who would have redeemed his investment would have failed to achieve his financial goals. An investor who maintained discipline during the entire journey is the one who would have sailed through these events and reached his goal.
^ Past Performance may or may not be sustained in future and is not a guarantee of any future returns.
No substitute for emotional strength
Any sportsperson will vouch for the fact that mental strength is as important as physical strength. All of us frequently hear that key matches/races are often won/lost in the mind. Focus, resilience and ability to cope under pressure - all play a critical part in the eventual outcome.
We have witnessed countless football or hockey matches where a team, which had performed flawlessly till then, crumbled under pressure in the last few minutes of a knockout game. Successful investing requires mental strength too. You are constantly subjected to a lot of noise in the financial markets but staying focussed and keeping emotions in check is imperative. Just like a player losing his cool and getting a red card in football can land his team in trouble, an investor losing his cool and reacting in a knee-jerk manner can throw a sound financial plan into disarray.
Right guidance can do wonders
Can you name a sport where a coach/mentor is not required? Think hard!! Can’t think of any? Well, there isn’t any such sporting discipline where coaching is not required. While there may be some athletes who are innately more talented than others, they still require a coach/mentor.
In fact, in many sports, players have a coach/mentor at all times, even till their last professional game. Just like a sportsperson’s coach, a financial advisor can play a pivotal role in the pursuit of wealth creation. A trusted financial advisor can help devise a financial plan as per investor’s unique circumstances and financial goals. The advisor can hand hold the investor during challenging times and guide him in the right direction. Having a better understanding of the financial markets and years of experience means that financial advisors can become pillars of strength for investors in their pursuit of financial freedom.
HDFC MF/AMC is not guaranteeing/offering/communicating any indicative yield or guaranteed returns made in this scheme. The views expressed herein are based on internal data, publicly available information and other sources believed to be reliable. Any calculations made are approximations, meant as guidelines only, which you must confirm before relying on them. The information contained in this document is for general purposes only and not an investment advice. The document is given in summary form and does not purport to be
complete. The document does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. The information/ data herein alone are not sufficient and should not be used for the development or implementation of an investment strategy. The statements contained herein are based on our current views and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Past performance may or may not be sustained in future and is not a guarantee of any future returns.
SIP Performance - HDFC Flexi Cap Fund - Regular Plan - Growth Option
SIP since inception* of . 10,000 invested systematically on the first business day of every month (total investment .35.30Lakh) in HDFC Flexi Cap Fund would have grown to ~ . 18.55 crore by 31st May, 2024 (refer below table).
CAGR returns are computed after accounting for the cash flow by using XIRR method (investment internal rate of return). The above investment simulation is for illustrative purposes only and should not be construed as a promise on minimum returns and safeguard of capital. SIP - Systematic Investment Plan. Since Inception Date = Date of First allotment in the Scheme / Plan.
*Inception Date: January 01,1995. The Scheme is managed by Ms. Roshi Jain since July 29, 2022. #NIFTY 500 (Total Returns Index). ## NIFTY 50 (Total Returns Index). Since Inception Date = Date of First allotment in the Scheme / Plan. As NIFTY 50 TRI data is not available since inception of the scheme, additional benchmark performance is calculated using composite CAGR NIFTY 50 PRI values from January 1, 1995 to June 29, 1999 and TRI values since June 30, 1999.
Notes common to all tables:
Past performance may or may not be sustained in future and is not a guarantee of any future returns. Returns greater than 1 year period are compounded annualised (CAGR).Load is not taken into consideration for computation of above performance(s). Different plans viz. Regular Plan and Direct Plan have different expense structures. The expenses of the Direct Plan under the scheme will be lower to the extent of the distribution expenses/commission charged in the Regular Plan. Returns as on May 31, 2024. The above returns are of Regular Plan- Growth Option.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
