Holi, the festival of colours, when observed carefully offers a range of money lessons to investors. From early preparation of this festival to the playful spirit with which it is celebrated – there are a range of key money lessons we can learn from it.
Just like we tend to play with a range of colours on Holi, it is advised to invest in a range of stocks in order to create a diverse portfolio. Also, it is recommended to not get intoxicated on Holi. Similarly, investors are advised to consider investing as a serious act of buying and selling instead of seeking a high.
Let us understand the six key money lessons one can learn from the festival of colours:
1. Early preparation: Before the festival kicks off, it is recommended to do some preparation the night before. It is common to get some water-filled balloons ready, prepare gujhiya and even concoctions of colours to be used.
In a similar fashion, one should first make the right plan before starting to invest. Before actually investing the money, one should study about the companies, stocks, overall market scenario and the reasons why stocks and sectors are moving in one direction or another. Once the background preparation is complete, the probability of making the wrong investing choices would decline.
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2 First coat on body: Some people put a coat of oil on their bodies before starting to play Holi. This prevents any hard colour from sticking to the body. This little trick usually keeps any harmful substance from doing any damage to your skin.
The same way, one should carry out some hedging of investment so that when bets go wrong, there is some embedded protection in the portfolio. This saves investors from drowning completely.
3. Safe with colours: Regardless of age and place and playful spirit, it is recommended to play safe with colours that do not harm your skin.
Likewise, investors should not go overboard with volatile stocks and asset classes. For instance, investing 80 percent of a portfolio in small caps or crypto assets is unsafe. Being an aggressive investor is one thing, and being unwise is another.
4 Diversity: While playing Holi, people should play with different colours of gulaal to make it a really colourful, diverse and rich Holi. How will it look if you play with only red colour, or even worse – black.
Similarly, in the world of investing, it has been emphasised enough to invest to stay diverse and create a portfolio with investments in equity, debt, precious metals and bank deposits. This ensures healthy and safe returns.
5 After-effect: Have you ever noticed that even after washing off the colours, some shade of the colour stays on the skin. This happens because of lack of early preparation and carelessness in which the festival was played. It is, therefore, recommended to either wash off the colours soon after the celebration is over, or avoid using the darker shades of colour.
The same way, investors should be very careful which stocks and asset classes they invest in. They should not bring the entire portfolio down even after they are redeemed. This can’t be totally prevented since invariably, there will be some key impact of each asset class on the portfolio, but once the stocks leave the portfolio — just like after the Holi colours are washed off — their impact should be minimum, if not nil.
6. Intoxication: Last but not the least, one must stay away from bhang (made from cannabis plants) on Holi, which some people consume out of fascination or at times, to conform to the norms. Investors should consider investing only as a means to get wealthy and to meet their financial goals and not as a speculative activity to get a high.
Play safe and invest safely.
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Published: 25 Mar 2024, 11:22 AM IST