Investing Lessons from Mahabharata!

Almost all of us would be familiar with Mahabharata, essentially the narrative of a war between the Kauravas and the Pandavas; the good and the bad; the virtuous and the vile. When it comes to investing, this good and bad is within us.

Diversify – Asset Allocation Draupadi in her previous birth had asked Lord Shiva for a boon. She had asked for a husband who should be righteous, brave, accomplished, handsome and intelligent. Shiva said that it was impossible for one man to have all these qualities and hence she will have five husbands.

Similarly, various asset classes have different qualities & characteristics and when they all come together they create a well balanced financial portfolio. Identify financial goals and allocate funds accordingly to have a well diversified portfolio. It is important to have safety of debt, growth of equity, shelter of a debt-free house and some comfort of gold. Mutual funds offer easiest way to help diversify across debt, equity, gold and soon real estate (REITs)

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 game of gambling against them. Yudhistra not just lost his kingdom and other assets but his brothers and wife too.

Fancy derivative strategies & products, hedge funds, complicated algorithmic systems and what not, they are not suitable for most! Just because they sound complicated, look exotic and promise the sky, people get enticed to them, just like Yudhistra was enticed to the game of dice. Don’t let the Shakunis allure you in the investing world. Stocks, Mutual Funds (Equity/Debt), PPF, Gold, Bonds,etc are best bets. As Leonardo da Vinci so rightly said "Simplicity is the ultimate sophistication"

Goal Based Planning

During one of training sessions, Dronacharya took the young princes to an open area. There on a tree was hanging a wooden bird. The task was to shoot its eye from a distance. Guru, asked all disciples on what they could see while aiming at the bird. Everyone answered seeing bird, trees, feathers, ground, etc. Arjun answered that he could only see the bird’s eye which had to be shot and nothing else. He successfully brought down the bird with one arrow.

Know your goals and stick to them. The trick is to not waver from your goals and not lose sight of them, come what may. Different spending needs require different time horizons & different investment products. Ignore the noise. Ignore 24 x 7 news channels. Monitor your portfolio periodically but not daily. Focus on your long-term investing goals and stay disciplined over market cycles. Rupee cost averaging, SIP is one great tool to inculcate that discipline by overcoming emotions.

Learn & Understand first!

Abhimanyu, the son of Arjun, had entered the Chakravyuh (man-made maze on the battle field) with partial knowledge of breaking it. Background is that when in his mother’s womb, Arjun was narrating how to break the Chakravyuh to Subhadra when half way through the story, she fell asleep. Abhimanyu thus could not learn the full technique yet entered the Chakravyuh and got killed, as he could not exit the same.

Financial market is also a maze. Understand fully the various asset classes & characteristics, various products, tax implications, costs involved, risks and much more. If you have the time and energy to understand first and execute the same later, do it on your own. Else get yourself a Sarathi, a mentor who can guide you!

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