Personal Finance Lessons from AAP

Written by Vidya Kumar

March 5, 2015

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Executive Summary – The Aam Aadmi Party (AAP) led by Arvind Kejriwal won the elections in Delhi in 2015. We can take some lessons from the party’s political journey and apply it to our personal finances. These include setting goals and having a plan to achieve them, learning from mistakes, taking calculated risks and managing the portfolio smartly.

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Arvind Kejriwal’s AAP has won the Delhi Assembly elections twice which is no small feat. We can learn a lot of lessons from AAP that we can apply in our personal finances.
 
Set your Goals and have a plan to achieve them – We should set our financial goals – long term and short term and design a plan to achieve them else the goals will fizzle out in some time. Arvind Kejriwal had a goal – Win the elections and have a corruption free country and had a plan to go about it. He apologized for the blunder he made the last time he won and went about wooing the voters. He spoke and rallied at the ground level. He held 110 public rallies to garner support. He understood the problems of the common man like availability of water and power and corruption. He spoke about these problems and promised solutions for them which struck a chord with people.

Learn from your mistakes – Arvind Kejriwal portrayed himself as an angry man the last elections. He also quit after becoming the Chief minister in 49 days and did not do well in the General elections in 2014. In the Delhi elections in 2015, the party used the media effectively, spoke to the people a lot and changed his image to a sensible man who was aware of the problems that people faced in Delhi like health, women’s safety etc. He also admitted that he made a mistake by quitting the last time and people liked the fact that he admitted to his mistakes which is quite rare in politics in India.  Investors should also admit to their mistakes. Instead of holding to wrong investments, it is better to sell them off, cut your losses and improve investment strategy.
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Personal Finance Learnings!!

Take calculated risks and try non-traditional options – We need to take risks to get returns, but risks that we take cannot be reckless ones. We need to assess the risks we are taking vis-a-vis the returns and check its impact and probability and then decide if we want to take the risk. The Aam Aadmi Party took a big risk by running in the elections again after the whole city was angry with Arvind Kejriwal’s act the last time he won. The party was competing against BJP which had won the national election and the Modi wave was very much there everywhere. He took risks and used different ways of contesting the elections and won it. The party used non-traditional options to reach out to people like using a research tool to analyse media posts to make the party manifesto. AAP used new media to reach out to the young people. It used a referral marketing campaign to get donations and reach out to people. Similarly you need to take calculated risks in your investments without being constantly afraid of failure so that you can get rewards.

Manage your portfolio in a smart way – AAP had a strong team. Arvind Kejriwal removed people who were not aligned to the party’s goals. He selected people in his team who were from all walks of life and a mix of inexperienced but passionate people and people well versed in politics. Similarly we should invest in different asset classes that suit our financial objectives. We should select the right products and make them work for us. In case of changes in market conditions or changes in economic policies, one should not blindly change the asset allocation. It should be tweaked only if the asset present is no more lucrative or financial goals change. Basically one should be aware of what is happening in the financial world and take the right investment decisions so that one can have a diversified portfolio with which one can manage risks and get optimum returns.

We have to see if AAP and Arvind Kejriwal live up to the expectations set. But these lessons will help us in improving our financial life.

*We do not support or are not against any political party. This is an attempt to use lessons learnt in financial planning. 


The author can be reached at [email protected]

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