Virender Sehwag or Mr Average: Steadiness trumps aggression in investing

Many investors can choose average over exceptional for most of their money. This will give them peace of mind and the freedom to take risks with the rest

You are tasked with picking a batter for your Test team. You have the rare advantage of foresight — you know exactly how their careers will unfold. Your first option: A player who redefined aggression in Test cricket — two triple hundreds, a strike rate near 82, and an uncanny ability to dominate from ball one. But brilliance came with volatility: 28 ducks in 181 innings, and failure to cross 25 runs in 41 per cent of them. However, he still averaged 49, thanks to his massive scores when he got going.

 

Your second option? A model of consistency: Seldom fails, crosses 10 in 98 per cent of innings, gets to 25 in 95 per cent, but rarely crosses 50, never scores a century, and ends his career with an average of 38. Who would you choose?

 

In cricket, the choice is obvious — you go with the match-winner (those stats are Virender Sehwag’s). But investing is not a sport. There are no selectors or crowds, just your financial goals. Here, Mr Average shines: Steady, low on drama, rarely fails. In investing, you don’t need to be above average — just close to it, consistently.

 

We are hard-wired to compete. A draw feels like settling, acceptable only when a loss looms. No one sets out aiming for it. Yet in investing, deliberately choosing a draw —a reliable outcome — may be a smart move.

 

Take a real-life goal: Building ₹1 crore in 10 years for your child’s education. That is about ₹46 lakh today, assuming 8 per cent inflation. Investing this lump sum in a Nifty 50 index fund, based on 3,395 rolling 10-year periods from August 2001 to March 2025, would have yielded an average of ₹1.68 crore, or 14 per cent annually.

 

Rolling returns show how an investment would have performed if started on any past day and held for a fixed period — 10 years, in this case. We do not cherry-pick lucky start or end dates. We look at all possible 10-year outcomes over nearly 24 years — 3,395 of them, to be exact — to see what kinds of results investors actually experienced. It is the closest thing to stress-testing an investment plan across different market conditions.

 

In 144 of 3,395 periods (about 4 per cent), the corpus would not have reached ₹1 crore. While the average return is strong, there is a small risk that the investments may fall short of the goal.

 

Now consider a more “average” approach: Park the lump sum in a liquid fund, transfer it to an index fund over two years, then back to a liquid fund during the final two years. Same investment, different paths. The result? None of the 3,395 scenarios misses the ₹1 crore mark. The lowest maturity value is ₹1.09 crore. The average return drops to 12 per cent, or ₹1.47 crore. You give up ₹21 lakh in average return for near-certainty of reaching your target.

 

Truth be told, nobody aspires to be average. No one dreams of picking Mr Average over Sehwag. The media is flooded with tips on finding the next big winner, rarely on spotting steady performers. Deliberately choosing an investment with high certainty of an average outcome over a possible high performer takes not just courage, but clarity.

 

Much of financial planning involves helping clients make this choice mindfully. The ecosystem is brimming with advisors claiming to be the best at picking winners. In such an environment, even pitching this as a conscious choice is hard. Yet many clients can afford to choose average over exceptional for the bulk of their money. Doing so will give them peace of mind and the freedom to take calculated risks with the rest. In investing, as in Test cricket, survival is underrated.

 

Here is a question worth contemplating: For the bulk of your portfolio, would you rather have Virender Sehwag or Mr Average?

 

Statutory disclosure: Past performance may not repeat. This is not investment advice. Please consult a Sebi-registered investment advisor.

 

The writer heads Fee-Only Investment Advisors LLP, a Sebi-registered investment advisor; X @harshroongta