This is not a political article and I am neither in favour of Mr Arvind Kejriwal nor against him but I couldn’t hold myself as an “AAM Niveshak” aka Mango Investor to bring out the financial lessons you can learn from him. Here is my part two in the three part series on “AAP, Kejriwal & Your Financial Planning, I will highlight the important lessons (both good and bad) which I believe every investor should learn from him: let’s analyze further and understand better
Be in the moment & leverage the mega trend:
You must have seen how retail investors shun stocks and often opt for safe haven investments such as gold. The common belief is that equity investments are risky and therefore should be avoided and you should only invest in it when the times are more certain. But you need to work out the right timing to optimize your portfolio by leveraging the trend, for e.g. when the economy is growing and market is good, investing more in equities makes sense contrary to a situation of global economic turmoil when investing in safe investment products like FDs/PPF etc. will make more sense. The key is to always be in the moment and capitalise on the trend to achieve your end goal.
“It has been proved that the reason of a huge success of many business ideas is attributed towards the fact that they get aligned to the market trends. Similarly Kejriwal identified the common man's angst against corruption as a trend and aligned himself to it and built support and attracted huge public sentiment towards his party by keeping the trend alive and finally he was trending on twitter also!”
Build a comprehensive portfolio
Once your ultimate financial goal is clear, your strategies are defined, you have the money to invest in; then you can’t afford to go wrong with your execution while investing the same in various assets class. To make your financial plan work, your implementation will play a crucial role in terms of selecting right financial products like Mutual Funds/Term-Insurance/Shares/Gold/Properties/FDs/PPF etc., hence select these products carefully. Many brilliantly prepared financial plans have failed because they were not executed well right from the beginning to the end.
“Not every start-up (AAP can be termed as a start up) gets the ideal team in place and that's exactly what Kejriwal did, he got members from all walks of life; right from the inexperienced people to seasoned ones while forming AAP. And this is a classic example of the right and wrong execution both because initially while forming his party & then selecting members’ the criteria was very stringent and it was done carefully which led to their success in Delhi election. But he failed big time in his second innings due to the management bandwidth and just like many unexpectedly grown companies, AAP, also faced lack of class, talented and experienced manpower who could manage the affairs or provide required leadership at various levels of the organization.”
Always have a plan “B”
Can you take out all your hard earned money invested in financial products meant to provide for medical emergency or your retirement corpus or for child’s education and invest in products which does not guarantee returns and has high risk return attributes? The question is not whether you can do it or not but rather can you afford to do it, can you afford to lose your money? Where will you fall back in case you make loss? What is your Plan B?
To be continued