These days reality shows are part of our life & I am not joking when I say I start my day with Bigg Boss. Yup! We record it on Tata Sky & once I am back from my Tennis Lessons, I & my wife watch it – I feel it’s a better option than listening to commentary of so called experts on Business Channels. Even I prefer watching ‘Doremon’ with kids over ‘Markets Today with Udayan’. But what should I do with power of my subconscious mind that can link even these Reality Shows with Financial Planning & Investments.
What KBC Can Teach Us
1. Setting Goals – First thing that Amitabh Bachaan asks is – where would you like to set your goals that you can achieve in given limited time. So there are 2 things, you set your goals according to your knowledge/stamina/capacity; second, risk is involved either you undershoot your goals or overshoot them. Setting realistic Goals is very important decision in your financial life & you should do it considering your resources & risk appetite.
2. Mind Game – participants get tensed as the stakes get higher. Investors say, we are very patient about our investments – we are investing since 2005 & we never sell in fear. (Even in 2008 when market was down more than 50%) And they are very sure that they will not do this in their lifetime – so my question is which one was your equation in 2008:
- Your income was 10 Lakh & your equity portfolio size 5 Lakh. Or
- Your income was 10 Lakh & your equity portfolio size was 50 Lakh.
There is difference between loosing 3 months’ salary in comparison to 2.5 years salary. In your investments your biggest enemy is your behavior & you do more mistakes when stakes are big.
3. Everything is equally important – is it possible that contestant give a wrong answer to one question & still win the Jackpot. Answer is NO. So it possible that one person is good at one aspect of financial life & he can have a successful financial life. Again answer is NO. One should be good at all the parts including investment, insurance, taxation, debt management, budgeting etc.
4. Help is Available – KBC gives 4 lifelines but contestant have to use it judiciously & some time a wrong choice can be fatal. Let’s check the Lifelines:
- Audience Poll – this is following the herd mentality, which investors do very often in equity markets.
- Phone a Friend – how many times you take financial decisions based on friends suggestions. But are they expert or they are just like you?
- Double Dip – Some time luck is on your side & you make some money but luck never gives you a second chance. “Never Confuse Brains with a Bull Market”
- Expert Advice – In KBC expert advice is available free but in real life it is not. Pankaj Pachuri helped Sushil Kumar winning is 1 crore but have you thought, what a wrong advice would have cost. Rs 48,40,000!! (or losing 95% of his money)
5. Tax – Sushil Kumar got 5 Cr or 3.5 Cr? Every investment should be seen in the light of tax – investments are compared on their after tax return. Is 8% return from PPF & FD are equal or 10% return from Debt & Equity are equal.
Bigg Boss lessons other than Cat Fights
1. Budgeting – these guys make weekly budgets with limited resources. Budget is the first step of financial planning & it is also the only medicine for good financial health. With technological enhancements, every day it we face new ways to spend our money without realizing its long term impact. When you don’t have budget everything looks important & necessary.
2. Cool Headed – why do you think most of the fights start in Bigg Boss House? Because most of the time we use Reflexive part (quick reaction) of the brain rather than Reflective Part (do analysis). Lot of time in articles I leave decision to you & write “take a cool headed decision”. This is part of Neuroeconomics – which says most of the financial decisions are taken by Reflexive part & Reflective part is not used. If you have invested heavily in some stock/asset – how you will react to some negative news flashing on TV during trading hours. THINK!
3. Wild card entry: Like entry of Sunny Leon, in Bigg Boss 5 or Dolly Bindra in Bigg Boss 4 changed the statistics of the game, same way financial life can also be full of surprises (and generally these are negative in nature & which is marked by cash outflows). In financial life one should be ready to face any negative accident and should change or revise his strategy accordingly.
4. Market is Supreme – Mr Bigg Boss changes the game with a small announcement. It doesn’t matter what you think about market – if you think market is undervalued, it can still go further down or vice versa. Don’t fight with the market – respect it.
5. And the winner is – who stays longest in the Bigg Boss house. Your one week/month performance will not make you the winner – you have to stay in the game till the end. Its time in the market & not timing the market which creates wealth.
Would you like to share what you have learned from these reality shows or any other TV Serial? Please don’t give examples from Serial KILLERS like CID or Kyonki Saas Bhi Kabhi Bahu Thi. 😉