Investment Lessons from the Movie 3 Idiots

The 2009 Bollywood blockbuster 3 Idiots, while primarily about friendship and the pressures of the Indian education system, also offers profound lessons that can be applied to personal finance and investing.

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Focus on Learning

In the film, Rancho (Aamir Khan) constantly emphasizes that learning and understanding are more important than simply chasing high grades. Similarly, in investing, one should focus on building long-term wealth through consistent learning about financial products rather than chasing quick, speculative gains.

Eg: Many investors get lured into schemes promising unrealistic returns & quick money. Instead taking time to research and understand the fundamentals of investments, such as mutual funds or stocks, can yield better long-term results.

Follow Your Passion — Align Investments with Your Goals

In 3 Idiots, the character Farhan chooses to pursue his passion for photography over engineering.

Eg: Just as Farhan was unhappy pursuing a career that didn’t align with his passion/ interest, investors who blindly follow others rarely succeed. The lesson for investors here is that your investment strategy should align with your personal goals and interests.

Avoid Herd Mentality — Think Independently

In the film, most students are driven by societal pressure and follow the same path of becoming engineers without considering their personal aspirations. In investing, this is akin to following the herd mentality—doing what everyone else is doing, which can lead to poor decisions.

Eg: When stock market is booming, many people invest simply because everyone else is. This happened during the dot-com bubble and the 2008 real estate boom. Smart investors, like Rancho, focus on their own needs rather than blindly following trends.

Don’t Fear Failure — Market Corrections Are Normal

The character Raju initially lives in constant fear of failure, which hinders his growth. Similarly, many investors panic when markets decline, leading them to make rash decisions like withdrawing investments at a loss.

Eg: Market corrections and downturns are inevitable. During the 2008 financial crisis, many investors pulled out of equity markets in fear. However, those who stayed invested and even added more to their portfolios during the downturn eventually reaped significant rewards as markets recovered.

Stay Informed and Adapt to Changing Markets

In 3 Idiots, Rancho’s approach to learning was unconventional but highly effective because he valued creativity and innovation. Similarly, in investing, it’s important to stay updated on new financial products and market trends and adapt your strategy accordingly.

Eg: Investors who ignored technology stocks like Amazon and Google in the early 2000s missed out on tremendous growth opportunities. Being open to new investment avenues like international funds or thematic funds can enhance portfolio returns over time.

Stay Calm During Market Volatility

One of the movie’s iconic lines is “All is well,” a mantra that encourages staying calm in the face of adversity. In the investment world, this mindset is crucial when markets become volatile.

Eg: During the COVID-19 pandemic, global stock markets crashed, but those who stayed calm and continued their SIPs, or even invested more, saw their portfolios recover and grow substantially in 2021 and beyond. Panic selling during a downturn often leads to locking in losses unnecessarily.

Happy Investing!