I must have watched the movie Spirit : Stallion of the Cimarron at least 15 times now. If you think what is so different about that, let me tell you it was in the last 3 months. Not to mention the fact that it is a kiddo movie. I rate it as one of the best movies ever, obviously for a host of reasons.
While I watched the movie, I tried to compare it with what personal finance lessons investors could take away from the movie as far as personal finance is concerned. Here I try to put down 5 key lessons that investors can apply in their investing life from this amazing movie.
Simple yet powerful personal finance lessons from a horse
1. Listen to your investment advisor/financial planner
The movie is about a stallion who is very different from the other horses in his herd. Since he is very brave, he ends up leading the pack. One night, he sees a shimmering light at the far end of the terrain and wants to step out to explore. His mom warns him not to. But Spirit is so curious that he does not listen. What follows is a heart wrenching bravado story that changes his life forever and puts you at the edge of your seat. Had Spirit listened to his mother, he would not have endured the pain he went through.
That relates to investors who do not follow the advice given by their investment advisors or financial planners. Among the clients that I have had, there are some that don’t necessarily want to listen to the advice irrespective of the scary situation they are in. They think a planner’s job is to fix their money problems and I constantly keep telling them that their mindset change is what will make the difference apart from executing what is being told to them. Some listen, some don’t. Those that don’t, go through the same hardships that Spirit went through and then learn their personal finance lessons.
2. Be brave
When human beings capture Spirit and put him into a cavalry without food or water, he almost breaks down. But then he comes back so strongly that he breaks people’s bones and gets the other horses to escape before he himself escapes, only to be followed and hunted numerous times in the movie. There is another instance when Spirit realizes that human beings are headed to his homeland where they will endanger the other horses of his herd. He unleashes such a catastrophic devastation that the entire railroad gets wiped out.
In the world of investing, people often play around with financial products that they never understand. And so when they lose their money, they vow never to use that financial product again. The classic example is that of the stock markets where direct stock investing is something which the biggest Dalal Street experts can never predict but investors trade without understand anything only to lose money. And then they say they will never invest in stocks. Little do they know that equity is the only investment class that can generate the highest returns for you over a long period of time. This is a very important lesson of personal finance and investing.
You never know how strong you are, until being strong is the only choice you have. Investors need to be brave to make money for themselves. If they burn their hands, they need to use that learning to make their tomorrow more successful.
3. Lie low when the tide is rough and be patient
This is a very important message that comes out from the movie constantly. Spirit is captured or chased or troubled so many times that he has no choice but to just wait for the right time to come to escape or fight back. There in an instance when a Colonel tames Spirit after Spirit has thrown off many horsemen off his back. Frustrated at being tamed and unable to throw the Colonel off his back, Spirit is frustrated and just puts his head down for sometime. The Colonel begins to brag about how many horses he has tamed and the very next moment Spirit has him flung high and far before he begins to escape.
The point here is that when the going gets tough and your investments are in the rut, there is really no need to panic. If you follow goal based investing, all you need to do is lie low when the tide is rough. So while India’s economy seems to have faltered now and the rupee is plunging each week against the dollar, you should not be making major changes to your investment approach. If you have used asset allocation as the basis of your investment, just follow it and you will come out with flying colors in the end. Sometimes, the best thing to do is to do nothing but just wait to win. Personal finance lessons that you need to learn in your lifetime are as simple as that.
4. Let go
Are you married to your investments ? If you bought some stocks or mutual funds that have turned out to be duds, do you buy more to average out your cost of purchase. That is like throwing good money after bad. It is important to let go and sell them. You would be better off for 2 reasons. First is you would have cleared the clutter in your portfolio. Less garbage to manage causes less stink. Secondly, you could use the money so generated to invest in the right places and earn some decent returns.
Spirit does the same thing. In the course of his amazing adventure, he befriends a human being. Towards the end of the movie, when he needs to return to his herd, he lets go of his human friend. That parting is painful and with music from Hans Zimmer, you can feel emotions choking you. But Spirit makes the right decision, he was the leader of his herd and he needs to go back there which he does. Wonderful lessons animals can teach humans !
5. Learn new things
Being the protagonist in the movie, Spirit is the central character. While the movie revolves around him, his love interest by the name of Rain come to his life to teach him new things – love. Spirit has never before seen her world and he naturally falls in love with Rain. The context of this love angle hits the viewers with more force later when Spirit jumps into a raging river to save Rain. What love can do to people, sorry horses !
The similarity I am trying to draw here is a simple one. Investors need to educate themselves on new things in the personal finance space if they have to make the best use of their money. With so much noise around being sold financial products, how can you make a decision if you do not have the right information ? And who would you expect to teach you ? You are your only savior so use free or paid information to scale up your knowledge on personal finance – after all its all your money.
Last Word
Let me know if you watched this movie and whether you were able to draw any parallel to the personal finance lessons I have jotted down here. If you haven’t watched it, I recommend it do it this weekend. And don’t forget to have your kids and spouse along with you. Your spouse because the songs from Bryan Adams are heart warming and your kids because, I did say its a kiddo movie !
Really a good lesson to be learned.I learned from my experience that losers are more knowledgeable than gainers. the looser learn how to come out successfully from difficult situations.
My thinking is to loose small,bearable losses.so you can learn first hand lesson and the ways to come out from critical situations.these are lessons differ from person to person.you have your own paved way.
Good luck.