Hey Guys, here is a quick sneak peek of Sunday’s Meet up!
We played, we learnt and all that is left is for us to grow rich now!
In this beautiful simulation put together by @Kanak Kr Jain and SSL Academy, we played an Asset Allocation game.
We were 4 teams put in different rooms. Every team had to discuss amongst themselves and choose how to invest the Rs.10 lacs they had. They had choices of investing in Debt, India Equity, Gold and International Equity.
Heated discussions happened in the rooms before they came to a decision.
Then the game started…
The game simulator had actual historical data for each asset class pertaining to different investment dates of the past 25 years.
A random date was picked by the game simulator for investing.
Every team’s 10 lacs was invested on that same date in the assets as per the allocation they chose. The system did a Vrrrrrrrr noise and played some Tan da Daan…music and threw up the wealth value of each team at the end of 1 year. Team 2 won the first round.
The teams went on to invest Rs.10 lacs every year for the next 4 years in the same allocation. Every time the system came up with different dates for investing – 1992, 2008, 2012, 2003.
Every round brought with itself the memories of events that happened then and the way markets and assets responded. Returns were allowed to compound. The system rebalanced at the end of every year to stay true to the preset asset allocation.
With every round (year) the winners changed. When stock markets had a fall the teams that chose debt and gold rejoiced. When equities did well the teams that chose aggressive equity portfolios far-out beat the others.
At the end of round 5, Team 2 was leading with a small margin.
Now the teams had a choice to change their asset allocation. They went back to their rooms to discuss. Team 1 chose to retain the same allocation, while the others made small changes.
And we played another 5 nail-biting rounds.
At the end of 10 years Team, 3 had won with a fairly comfortable margin.
Rs. 1 crore invested over 10 years had grown to 3.10 crores. Aggressive allocation of 35% to India equity and 30% international equity had helped them. The other teams had accumulated between 2.57 to 3.02 crores too.
It was such a fun and effective way to learn some key investing concepts.
We had 4 big takeaways :
1. Changes in asset allocation made a significant impact on the amount of wealth created
2. Investing regularly without skipping, enables better time diversification
3. Periodic rebalancing brings sanity.
4. Compounding does its own magic
Certain things can be learned by watching or reading about a game. But the learning from playing a game is of another level.
First, 1 – 2 of us will reach the goal, then 10 – 15 and then 100s and then all of us will reach the 10 Crore goal. That one thing is for sure. We just have to stick around, immerse ourselves and play along…