Business Insider | Aug 5, 2014, 03.51PM IST
During the long-drawn election campaign for the recently concluded 16th Lok Sabha polls, India witnessed a proficient orator and an excellent marketer in Narendra Modi
who made an impression on every voter in the country and created history by coming to power with a landslide victory. Although the jury is still out on whether he can live up to the expectations of his countrymen, retail investors certainly stand to gain from him.
The gains, so far, have been tangible as the BSE Sensex, the 30-share benchmark index of the Bombay Stock Exchange (BSE), has already registered gains of 20% in 2014, compared to 9% gains posted in 2013. But that apart, investors can take away a lesson or two about how to handle their finances from Prime Minister Narendra Modi.
Lesson 1: Adopt a disciplined approach to investments
If there is one thing that Narendra Modi lives by, it is his discipline. Come what may, he is known for never moving away from his disciplined regimen. This is a great thing to learn and emulate from our Prime Minister. As an investor, if you have a systematic and disciplined approach towards investing, your financial goals will seem more achievable. Chalk out an investment plan to meet the financial goals you have in mind and invest accordingly. One way to do it is investing in Systematic Investment Plans or SIPs that help you meet your investment objectives over the long term.
Lesson 2: Do away with the clutter
As soon as Prime Minister Narendra Modi assumed office, he made it clear that he disliked clutter of any sort and thus began the 'cleaning drive' beginning with the babus. The Prime Minister even made it clear that presentations had to be succinct to bring out the important issues to the forefront. Similarly, when it comes to your portfolio, take care to see that it is not a collection of unwieldy investments that are causing the clutter. Ideally, there should not be more than 12-15 stocks in your portfolio. If your portfolio is too large, see whether you require diversification and distribute your investments among various asset classes.
Lesson 3: Underperformers should go
Modi has made it amply clear that he has zero tolerance for slack attitude. Each member of his Cabinet and the babus are to be on their toes and on the top of things. Otherwise, heads will roll, as he has clearly communicated. Your approach should be similar when it comes to the underperformers in your portfolio. Do not keep underperforming stocks in your portfolio forever. And the same holds true for mutual fund schemes. If you find that a scheme is constantly underperforming, compared to its peers as well as the benchmark, for over a year, use the first opportunity to sell out and deploy the funds elsewhere.
Lesson 4: Ears to the ground
For the first time, we have a prime minister who makes his opinion or action clear on any issue of national relevance on the social media platforms. This shows that he is not just tech savvy, but likes to keep himself updated on all minor and major issues of national and international significance. This is a lesson an investor should learn from him. As an investor, you should be cued in to what is happening across the markets and asset classes to ensure that you can take relevant action when it is required.
Lesson 5: Be undeterred when need be
Modi is also known to be a leader who can take harsh decisions when need be, without worrying about criticism, whether it is from within his party or from the Opposition. He can do this because he believes he is in total control of the situation. Similarly, if you have taken an investment decision after sound research, have the conviction to stand by it and do not get swayed by the noise around you.
Prime Minister Narendra Modi has displayed various traits that have come across as impressive in the first nine weeks that he has been in office. Whether he can deliver in sync with the great expectations India has from him remains to be seen. Meanwhile, small investors can certainly learn these lessons in money management from his activity and personality traits.