Personal Finance Lessons From Kar”Nataka” Election

You will agree elections have become really interesting – Timepass.

Sometime back had a word with one client in England and he told me that if you are not following football you are considered dumb in Europe.

I think these days same applies in India if you are not following the election mania.

Let’s start with a joke that I got on WhatsApp. 

साला कर्नाटक में 8 विधायकों का इंतजाम कैसे होगा .? 

Finance Lessons from Karnataka Election

But I think we can learn Personal Finance from even this Karnataka election:

Life priority

First, let me contradict what I mentioned in earlier part of this post. If you are not a politician does it really make sense to waste so much time on these elections?

Every year we have two-three elections, and media make a lot of noise just to catch the eyeballs which help them in increasing their advertisement revenues. Politicians love power. But what about us? For us its family, our job – that’s priority.

Focus on things that you can control

I have checked voter turnout of these elections I think it’s around 72% and maybe highest in Karnataka history. This is good and people should participate and use their voting right but the result is not in our hands.

Whichever side you were – you can hardly make any difference to the election happening in the south by fighting with your friends on Facebook in North.

Average – playing with numbers

Interesting tweet by Siddaramaiah

This is an awesome example of the misuse of averages. [later some media person asked him about the tweet but he was not aware of because these days most of these Twitter handle are managed by some professionals].

If I say- the average annual return of xyz equity fund is 15% you may say wow I will get 15% year on year – I will say oops. Hmmm

Averages in investment world are misguiding. In equity in one year you may get 50% plus but next year you may get minus 25%. I think new clients don’t understand this or they don’t want to understand this.

{I will write a detailed post on this}

Dynamic

I keep saying that life is dynamic so plan cannot be static.

Congress and JDS fight election against each other but when they were not able to reach the majority on their own. Then they shake hands.

So when situation change you should be mentally prepared for tweaking the plan.

It’s not over till it’s over

Election result day was really interesting, Congress was neck to neck initially but then major part of the day it was believed that BJP will get a majority on its own. BJP people started celebrations but by end of the day they got a rude shock – in Hindi “haath aya munh na laga“.

Sometimes we get carried away by the market – things start looking so easy and achievable that we lose focus. We have long-term goals and to achieve them it’s really important to keep calm.

Bw in politics “it’s not over till I win”

Protect Resources

Congress & JDS combined had wafer thin margin so they played their cards well by safeguarding MLAs in resorts.

When resources are limited at some stage wealth protection is more important than growth.

Difference between theory and practice

HD Kumaraswamy in all his interviews before the result was saying we will not shake hands with anyone (theory) but even before the announcement of final results, he was at Governor’s office with Congress (practice).

In theory – theory & practice are same but in practice, it’s not. Let’s not talk about Morality here 😉

Mr. Governor

This has happened many times in Indian politics that rules are changed based on whims & fancies of ruling party at the center. The other parties have their limitations.

Similarly, in investment – rules are tweaked by SEBI (recent Mutual Fund Categorisation) or Finance Ministry (Long Term Cap Gain) – we have no choice but to play with new rules.

No need to imagine Supreme Court will help us.

Media

Is just blah blah blah – be it politics or finance. They have no clue about the future but they know how to keep you hooked.

Hope you enjoyed the post – feel free to add your learning from elections.