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Chess, ultimate game of strategy and the game of royalty, is one of the most popular game in the world. According to the United Nations, 70% of the adult population in the US, UK, Germany, Russia, and India has played chess at some point in their lives and about 605 million people play chess regularly. The game is so complex that on one hand, it is said mathematically there are more possible moves of chess than atoms in the observable universe and on the other, it is still possible to checkmate your opponent in just two moves.
With its origins dating back nearly 1500 years, chess is the only board game that stood the test of time. It is believed by many that Chess originated in India. It was known as ‘Chaturang’, named after the four parts of an army namely the elephants, chariots, horsemen and foot soldiers. While Chess began as a battle simulation game, it may not be wrong to say that the game teaches a lot about life and investments.
Let’s see how...
Chess is a game of strategy. Even before the first move is played, chess aficionados prepare their game plan and strategize. Similarly, before one starts putting their money to work, it is important to be aware of our financial goals and investment hori- zon, which would then define our investment strate- gy. Players, when stuck, often take help from coach- es to fine tune their game plan. Similarly, when in doubt investors can gain from the expertise of finan- cial advisors who can help them fine tune their fi- nancial plan.
Chess is a game of strategy. Even before the first move is played, chess aficionados pre- pare their game plan and strategize. Similar- ly, before one starts putting their money to work, it is important to be aware of our finan- cial goals and investment horizon, which would then define our investment strategy. Players, when stuck, often take help from coaches to fine tune their game plan. Similar- ly, when in doubt investors can gain from the expertise of financial advisors who can help them fine tune their financial plan.
There are six types of pieces in chess, 16 pieces in all, eight pawns, two bishops (camel), two knights (horse), two rooks (elephant), one queen and one king. Each type of these pieces has a defined movement and can attack their opponents only through a defined set of rules. Each one of them has a unique place in the game.
Similarly, when it comes to life it is important to know that all of us are unique with unique journeys. And with in- vesting, remember, each asset class has its own features and place in an investor’s portfolio. For example, debt is relatively stable whereas equity is prone to bouts of volatility but has the potential for growth vis-à-vis debt.. We often, without thinking, use debt for long-term investments, forgoing the extra return we would have earned, had we invested in equity. Similarly, we invest in equities and with even slight and short-term movements in the market, redeem within months or days, without giving our investments adequate time to grow.
Equity is well suited for long-term investments. Debt tends to bring down volatility and gold acts as a hedge against the negative impacts of inflation or geo-political events. We create robust portfolios only when we align the characteristics of each asset class with our time horizon and risk appetite.
Chess is a game of patience. There are times during the game when the players have to keep their mind calm and decide on the next move. So much like in- vesting (and life), where short term news, or market movement can make us restless. However, like a good chess player, we need to remain calm, not take any hasty decisions, stick to our plan and let the vol- atile investment cycle tide over.
It is often said in chess that the Queen has the most powers, however if the King is dead, the game is over and hence it is important to protect the king at all times. In investing (and life) the king translates to what is most important for us and the need to pro- tect that. What we value, needs to be decided by us. It could be child’s education or sending parents for their dream vacation. Whatever we think is import- ant, it is pertinent that we start investing in that di- rection.
Just like winning at chess, the path towards wealth creation and financial freedom involves strategy and discipline. The analogy between the two is aimed to help you maneuver your investment jour- ney.
Happy International Chess Day.
From Suresh Soni, CEO, Baroda BNP Paribas Mutual Fund
Source: www.un.org and www.britannica.com
Disclaimer:
The views and investment tips expressed by experts are their own and are meant for informational purposes only and should not be construed as investment advice. Investors should check with their financial advisors before taking any investment decisions.
The material contained herein has been obtained from publicly available information, internally developed data and other sources believed to be reliable, but Baroda BNP Paribas Asset Management India Private Limited (formerly BNP Paribas Asset Management India Private Limited) (AMC) makes no representation that it is accurate or complete. The AMC has no obligation to tell the recipient when opinions or information given herein change. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. This information is meant for general reading purposes only and is not meant to serve as a professional guide for the readers. Except for the historical information contained herein, statements in this publication, which contain words or phrases such as 'will', 'would', etc., and similar expressions or variations of such expressions may constitute 'forward-looking statements'. These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. The AMC undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof. Words like believe/belief are independent perception of the Fund Manager and do not construe as opinion or advise. This information is not intended to be an offer to sell or a solicitation for the purchase or sale of any financial product or instrument. The information should not be construed as investment advice and investors are requested to consult their investment advisor and arrive at an informed investment decision before making any investments. The Trustee, AMC, Mutual Fund, their directors, officers or their employees shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages arising out of the information contained in this doc- ument.
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