MONEY AND HUMAN PSYCHE
Many a thoughts arise in one’s mind relating to money. Amongst them there are few which are likely to arise in almost every body’s mind. A sample of such thoughts are enumerated below.
The price of the car I bought last month has come down. I would have waited and bought it later.
The price of the cell phone I bought has reduced by half.
Why did I take a housing loan in floating rate interest? This has become almost become equal to fixed interest rate.
The house for which I am repaying loan(EMI) is not fetching enough rent. Should I sell it or not?
The stock which I bought yesterday has come down. Why did I buy it?
In National Savings Certificate, I invested four years ago. I have to wait for another four years for it to double/mature. Why one has to wait for such a long time to get this return?
Many more thoughts of such kind would have arosen. We always do certain things in our life only to repent later. More so in financial matters. There is a close link between the human psychology and financial decision making. We are ready to take a housing loan and pay about 60 to 70 percent of our salary as EMI and feel nice about it with out realizing that the asset you have bought is draining you down rather than providing a current income( unless it is rented and rent is more than EMI).All those personnel buying motor cars on loan, it is even more worse. Buying a car and running it itself leads to a reasonable amount of cash out flow. To top it all, if one has to shell out an EMI, it does not make any economic sense.