Five key investing lessons from the Mahabharata

Mahabharata, one of the greatest epics in Hindu mythology, is known to offer valuable lesson on life, relations, success. Hence, the epic also offers helpful tips for making investments. Here are the five investment tips from the Mahabharata:

Knowledge is your 'Divyastra': Arjuna, Bheema and Yudhisthra undertook long hard journey to obtain Divyastras, strength and strategic wisdom much before the actual battle of Mahabharata. Arjuna kept learning various skills all his life. To learn more is to grow more and achieve more. Knowledge in investing helps us in growing our investments. Unfortunately, not many are aware of the various investment options one has to secure their earnings or grow them. Similarly, the inadequacy of knowledge of mutual funds amongst investors and potential investors acts as a barrier in achieving their goals or creating wealth. Taking a cue from the epic Mahabharata, it could be said that ‘knowledge’ is no less than a ‘Divyastra’ that may help us in achieving our financial goals, securing the future of our loved ones and may help in creating wealth.

Goal-based planning and periodic monitoring: During one of their training sessions, Dronacharya took the young princes to an open area and gave them the task to shoot at a bird’s eye from distance. While everyone answered seeing the bird, trees, its feathers, ground, etc., all Arjun could see was the bird’s eye. Hence, he shot down the bird with one arrow. To achieve ones financial goals, one needs to identify the goals and stick to them. One needs to ignore the market theatrics regardless of how much the noise penetrates into your mind and tries coercing you to give up. It is also advisable to identify mutual fund schemes according to the time horizon of your goals. Investors should monitor their portfolio as deemed fit to stay updated and not panic during short-term volatilities.

Over-diversification leads to doom: In the battle of the Mahabharata, the Pandavas consisting of just five brothers had eventually defeated the Kaurava clan of 100 brothers. This shows it’s easy for a leader to communicate and be able to head five people than a team of 100! In investments too, it gets difficult to keep a track of too many portfolios. Hence, it’s suggested to stick to schemes or products with a focused portfolio consisting of less number of stocks, say 20-25 stocks. This is an example that over-diversification does not create value.

Do not follow things blindly: Abhimanyu had entered the man-made maze on the battle field alone with partial knowledge of breaking it that got him killed, since he did not know how to exit the same. In the investment space too, investors may tend to act without thinking or may panic during market volatility. The lack of knowledge about a subject may lead them to in making wrong investment decision. This further leads to from achieving financial goals. Before investing in any scheme, an investor should read the scheme details thoroughly or consult with a financial advisor. Also, a financial advisor can help the investor during market turbulence by counselling him with his conviction and not letting the investor fall prey to market volatility.

Keep it simple: Shakuni was an expert at the game of dice. He conspired to call on Pandavas to Hastinapur and then helped Duryodhana win the game of gambling against them. Yudhistra not just lost his kingdom and other assets but his brothers and wife too. On being restored their wealth by Dhritrashtra, they again lost everything in the second round and were sent to exile for 13 years. In the investment world too, the same theory can be applied. Being an investor, if you are unable to identify the risk and returns or alternative investment options available; just learn to keep it simple. Do not get enticed by the lure of quick returns or fancy products and focus instead on good investment options. It’s still okay to earn less, but it’s not okay to lose everything.

GOOD OLD TIPS FOR FINANCIAL GOALS

1. It’s easy for a leader to communicate and be able to head five people than a team of 100. In investments too, it gets difficult to keep a track of too many portfolios
    
2. Lack of knowledge about a subject may lead investors in to making wrong investment decision. Before investing reading scheme details is imperative
    
3. If you are unable to identify the risk and returns or alternative investment options available; just keep it simple

The writer is managing director and CEO, Motilal Oswal AMC