17 May, 2017

The kingdom of the Gods!



There is so much work. Yet I took a holiday to go to Bhutan to rejuvenate to take on responsibilities that lie ahead. I'm glad I did. 

Bhutan is an amazing place. The entire country is like a spa. You need not necessarily visit all the places. Being there is therapeutic. Have come back revitalised & suitably impressed with the country which measures it's riches on the happiness scale.

Here is my travelogue on Bhutan -




Author  -   Suresh Sadagopan  | Founder | www.ladder7.co.in


#SureshSadgopan #FinancialPlanner #FinancialAdvisor #Fiduciary #LifePlanning #FeeOnly #HolisticAdvice #Ladder7

01 May, 2017

The Bamandayapada Syndrome


                                                                                Picture credit - www.pixabay.com
A long time ago, I had gone to meet one of my clients, in a place tucked away in one corner of Andheri ( a suburb of Mumbai ). The first time I went there, the place was a revelation. I had never ever been there before. It was a quiet place – a real cul-de-sac which was quaint and removed from the hustle & bustle of Mumbai. 
But was reaching there convenient? Would I want to stay there? No, not really.
Reaching there took time and some autos did not want to come there. They said they don’t get any customers there! When I met my client and asked him about the place, he was raving about it as if it were Hawaii, Sikkim & Simla rolled into one!
He pointed out the obvious attractions – the place was quiet even though it was in Andheri, you could get everything you need in the nearby shops, good neighbours, it was connected by buses, the place is just somewhat away from the arterial Andheri Kurla Road ( which is just as well! )…
I got to know that he had spent quite some time here. And had got quite attached to the place called Bamandayapada, where his home & hearth was!
It has the attractions that my client had pointed out. But you can find cul-de-sacs in many places, with shops vending what-have-you, buses plying to and fro & the place being in the vicinity of some could-not-miss attractions.
In fact we may all be able to romantically describe our homes with bated breath. All of us get attached to our places, our homes, our possessions etc., sometimes bordering on the irrational. 
We feel that our home is somehow special – located as it is 500 meters from the arterial road, not far from malls & theatres, with sunshine streaming into the bedroom after the winter solstice, has some green cover when we see at 135 degree angle from the bedroom window etc.!
Reason enough to call this The Bamandayapada Syndrome!
The syndrome is a behavioural quirk. If it is not going to affect us, we need not be so bothered. But it is going to affect us deeply.
For one, such deep, entrenched thought patterns ensure that one would make debilitating mistakes in life, due to this. This happens all the time with real estate. 
We tend to overvalue our property due to our perceptions of what we feel are enticing plus points of the property we own. Our property somehow seems special to us. Due to such perceptions, the owner of a property tends to expect a good premium on the house. Real estate market is replete with people sitting on unsold property for years, for this reason. Bamandayapada Syndrome is fairly common among home owners.
Many such people would wait for years to “get their price”, in the bargain actually losing money. For instance, if the market price of a home is Rs.1 Crore & the owner is expecting Rs.1.25 Crores & decides to wait and finally sells after 4 years at Rs.1.25 Crores, he has actually lost money – for Rs. 1 Crore four years earlier could have earned much more than just Rs.1.25 Crores, which he earned, four years hence.
It’s very pronounced in real estate. But this is hardly true of only real estate. This is true across the board. And in psychology, it has a name – Endowment Effect, where something that we own, seems much more valuable to us, than it really is.
This is true for anything we possess – cars, collectibles, our equity shares, even our children. We all have heard of mothers singing paeans about their daughters, which generally leave their husbands wondering if it is the same woman they were referring to! That’s endowment effect again!
The term endowment effect was coined by economist Richard Thaler for under weighting opportunity costs of goods that are a part of their possession than others which are not.
There is a famous experiment done by Daniel Kahneman & others, in which the participants were given a mug and were given a chance to trade it with an equally valuable item, in this case a pen. They found that compensation sought once the ownership of the mug has been established ( willingness to accept ) was twice as high as the price they were willing to pay to acquire the mug ( willingness to pay ).
This is a behavioural anomaly. We can make mistakes arising out of this. We need to be watchful to not fall prey to this. The most important thing here is to recognize it, before we get sucked into it. Knowing is the first step to handling it. When in doubt, it is better to get a third party opinion and then take informed decisions. That way Endowment effect cannot overwhelm us!

Article first appeared on Linkedin:
The Bamandayapada Syndrome


Author  -   Suresh Sadagopan  | Founder | www.ladder7.co.in


#SureshSadgopan #FinancialPlanner #FinancialAdvisor #Fiduciary #LifePlanning #FeeOnly #HolisticAdvice #Ladder7