are designed taking advantage of this psychological bias – we don’t see the reality, we end up taking our investment decisions on what is presented to us, not what we need or understand. The job is very well done by agents and brokers. They may not be aware of making profit calculations, or in judging whether this policy is good or bad for the customer, but they gradually become experts in taking advantage of psychological biases and mentioning about the circumstances in which we may need a particular policy.
They initially start by telling you why this policy is good and what it can offer – slowly they move to inform you about clubbing thewith Equity investments, bond investments, regular , education shield, accident cover, health insurance, tax savings, blah, blah, blah, blah – the list is endless. Rest of the ambience is created by our own wellwishers – colleagues, friends and relatives. They are these smart-alecs who first buy such policies, and then they start advocating about the intelligent investment they have made and also persuade others to do the same by buying the similar policy or make similar investments. In my previous company, there was one such real fanatic “trader”, who would go to such an extent of forcing people to start trading that he would sit with them individually and discuss with them for hours about how good it is to trade and real money is in only. He was even willing to schedule meetings with the brokerage firm agents to open trading accounts.
As salaried individuals or businessmen or doctors or other professionals, we find it difficult to devote time to understand these financial calculations. The interesting irony is that thesedecisions are made to secure our future financially – and while buying such products we are the least bothered about the nitty-gritty. Ultimately, it’s human nature – the only thing that can be done is to educate ourselves and use some more presence of mind. We work so hard to earn our money – we leave our money decisions to agents and well-wishers! We get trapped with what is presented and ignore what is right and what we want.