by Parul
How do you feel after you buy an expensive car, or a Snickers chocolate? Shouldn't you include that in the price?
The price of something isn't just the cost of what we pay. The real, hidden price includes everything we feel about what we buy - excitement, enthusiasm, happiness, guilt, regret. And this is very different from person to person.
Let's for example, take a stock or mutual fund investment. One kind of investor, who is very enthusiastic about investing, may snap up a stock - for example, Titan at what he thinks is a bargain price of Rs. 1065.3 on August 21st. He then watches as the price climbs and falls, to Rs. 1,037 before rising to Rs. 1,123.4 on September 13. That's a gain of +5.45% in less than a month, and he is excited and pleased.
Another more aggressive investor may have bought Titan expecting a jump of 10% in share price as markets recovered. He may feel regret at the purchase because he missed out on bigger buys while putting money on Titan.
A third, very nervous investor may have watched the stock initially fall to Rs. 1,037 on September 4, and get extremely upset at the price fluctuations.
The true cost of purchase is thus very different for different people - whether it is purchasing a stock, a box of sweets - where the price you pay is guilt after consumption, or buying a fancy new car - where the price is explaining the purchase to your wife.
It is important for investors to ask themselves: how will I feel about this on purchase? Are you the nervous kind of buyer, who would be happier with fixed deposits and low risk mutual funds, or the moderate investor, who is happy with good gains on blue chips? Or is it only the really risky investments that excite you? Knowing who you are helps you figure out the real cost of your purchase. Because there is definitely is one, and it is not just the price you pay in rupees.
