Try The Virat Kohli Style Of Investing | My Money Sage
We all know and love Virat Kohli, the captain of the Indian cricket team. He is committed and passionate when it comes to cricket. This exuberant attitude is seen in everything he does. This includes his endorsements and business ventures.
As you might know, Virat Kohli is one of the highest-paid athletes in India. His net worth is estimated to be a cool $25 million, that is, Rs. 174 Crore in 2019. He is ranked 100 when it comes to the list of highest-paid athletes in the world. He earns about Rs. 146 Crores from his brand endorsements and his salary is about Rs. 27 Crore.
Virat Kohli’s first investment was at the age of 25 when he became the co-owner of ISL team FC Goa. It happened in 2014. According to sources, the association has been worked out in a way that the cricketer has a minority stake in the franchise. Industry estimates peg the Goa franchise cost at Rs 12 Crore (a year). This means Kohli’s investment in the team would be under Rs 1 Crore. At that time Kohli was only the Vice-Captain of the Indian team.
With Virat himself is a popular brand, his endorsements have increased over the years. Brands that he endorses include Audi cars, MRF tyres, Tissot watches, Gionee phones, Boost milk drink, Colgate toothpaste and Vicks lozenges. As of March 2019, news reports say that Virat Kohli has increased his endorsement fee to Rs. 5 Crores a day.
His business ventures include sports teams FC Goa (football), UAE Royals (tennis) and Bengaluru Yodhas (wrestling), Chisel (a fitness chain), Sport Convo (a social media company) and Wrogn (a fashion brand).
One of his business ventures includes an Rs. 110-Crore deal with the German sports and leisure brand Puma for his brand one8. One8 brand is named after the Number 18 cricket jersey he wears. One8 offers branded apparel, footwear, accessories, fragrances, packaged water, flavored and vitamin waters, and energy drinks.
News reports say that the Puma One8, co-owned by Kohli and Puma, grossed over Rs. 100 Crore in the Indian market within a year of its launch in 2018. Kohli has launched Puma-one8 kids innerwear in September this year. Speaking about the launch, he said “Today’s era is defined by the restless and dynamic youth of the nation, where style and flexibility go hand in hand with comfort. As a sports person, I am extremely cautious when it comes to finding comfort both on and off the field. With this launch, we not only aim to revolutionise the industry but also intend to evolve identities synonymous with the brand.”
Since the time he started his career, his investments have included a combination of assets—business ventures, real estate, fixed deposits and equity. He likes to keep his income portfolio diversified and he picks only businesses that he believes in. Here are some money lessons that you can learn from Virat Kohli.
Virat Kohli is the best batsman across all formats of the game currently. One might argue about Steve Smith is the best batsman regarding the test matches but even the Aussies would not deny the supremacy of Kohli across all formats of the game. Kohli’s ODI average is hovering around 60 and the T20 International average is around 50, Test Match average is around 54. These are astonishing numbers but we need to understand that the Kohli, the King has been built brick by brick through his ODI performance. The calculative approach in his game especially during chases is a trademark facet of the Kohli Template. Begin cautiously, respect the top bowlers of the opposition, play shots down the ground, cut out the risk of premeditated shots and cash in when the target is well in sight. He does it match after the match like a machine to the point where it could get almost boring. There is a method to his game and his numbers are the proof.
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Let us try and see if we can apply Kohli’s strategy step by step while investing. Kohli invariably starts with caution and does not start with lofted shots in the initial part of his innings. This is a valuable lesson in itself for an investor who is starting. Stick to asset allocation as per the age and risk profile. Do not deviate towards high-risk options initially thereby upsetting your asset allocation model to accommodate a high risk-high return product. Asset allocation plays a key role in the long term and however, the market conditions might be attractive, start with investments based on clear asset allocation.
Always be aware of the long term perspective, Kohli is aware of the threat posed by top-quality opponents and he gives them the due respect –but he is always aware that he can catch up with the run rate later when the less threatening bowlers arrive. The market presents a variety of threats – domestic slowdown, international trade wars, a war-like situation with the neighboring country, etc. These factors present a threat of capital erosion during a specific period and it is important not to get influenced only by the short term movements. When the investor is committed to his asset allocation model, he needs to stick to his game patiently as the rewards of long term investing would not be impacted by these short term factors.
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People who have watched the great Steve Waugh bat would remember his famous slog-sweep shot. While Waugh enjoyed a great control over the shot, this shot is frowned at by purists due to the risk associated with it. You would rarely see Kohli play a pre-determined shot. Kohli’s is a game built purely on the merit of the ball, ball by ball. No dancing down to the spinner for a heave over mid-wicket. If he has read the ball totally and the situation demands it, yes but not otherwise. Here lies a valuable lesson for the investor. Any tactical change in portfolio planning as a knee jerk reaction to the market developments could be highly risky. When there is strong strategic planning in place, trust the same to achieve the objective without too much tinkering with the portfolio model.
We have been discussing Virat Kohli’s ODI game and how risk-averse his game plan has been. Astonishingly Kohli’s average strike rate is around 93. Herein lies the lesson for the investor, the slow and steady wins the race also clocking a healthy pace. How is this possible? When Kohli is completely set and the win is insights, he does not stop himself from going inside out to play a gorgeous lofted cover drive. He invariably ends up with a healthy strike rate at the end of the innings through this strategy. When he sees a real opportunity to seal the game, he presses the pedal on the run rate. An important lesson in match awareness and even for investors as well. In financial planning, we set out our objectives in terms of clear return targets for our portfolio model. If we find ourselves in a situation where we could potentially book considerable profits because of a market rally as we have already crossed our objectives, we should not hesitate. Partial profit booking during a huge rally would help in averaging out your overall returns even diminishing the impact of sustained bear runs.
Virat Kohli is a master in motion. While we savor this golden era of a super batsman, we need to look at imbibing his methodical batting approach in our investment planning for best returns in the long run