Huge Mangoes

If you thought only India had mangoes, see what Oman produces ! The mobile phone will give you an idea of the relative size ......

RSK

Fine Balancing Act

Amazing skill and concentration  ....Take a look

RSK

 

http://www.youtube.com/watch_popup?v=jJrzIdDUfT4&vq=medium

NASA’s March 7th photo of the Sun is amazing

 

 

http://apod.nasa.gov/apod/ap110307.html

 

 

Indian Air Force rejects American F16 and F/A 18 as they fail tests

French Rafale and Euro Fighter shortlisted for price negotiation

 Loren Thompson of the Lexington Institute think tank and a consultant to Lockheed Martin says he has been told by company 

officials that both the F/A-18 and F-16 have been dropped from consideration by India. 

And here's Lockheed's not very informative but perhaps telling statement: "The US Government has informed Lockheed Martin 

that they have received a letter from the Indian MOD concerning the MMRCA competition. We understand that the US Government

 is working on a response to the letter from the Indian government. Lockheed Martin remains committed to our relationship with

 the Indian Air Force, Ministry of Defense and the other Services.  Lockheed Martin has several world-class products offering the

 most advanced and reliable technology we believe is suitable for India's security needs."

Reports out of India today indicate that country's government has narrowed down the list of planes it is considering

 buying as the next next front line fighter jet and that both Lockheed Martin's F-16 and the Boeing F/A-18 Super Hornet have

 been eliminated from the competition.

If that is the case it could mean the days of the F-16 being produced in Fort Worth are nearing an end. Company officials 

said in their conference call Tuesday they only have orders booked to carry production through mid-2013.

 About the only thing official on the subject at this point is that Sweden's Saab has confirmed that it has been eliminated. 

But one blog reports it has confirmed that India has asked two bidders, France's Dassault and the European Eurofighter

 consortium to extend the terms of their bids.

Lockheed has not yet commented to the Star-Telegram. A Boeing spokesman said he had not heard anything official from his 

corporate ranks. But Washington defense analyst Loren Thompson, who has many good sources in the world of defense contractors, 

said he has heard similar but unofficial reports.

"My understanding is the F-16 and F/A-18 have both been disqualified by India," Thompson said.

India has for years been tantalizing fighter jet manufacturers with its plans to spend something on the order of $10 billion 

to buy 126 Medium Multi Role Combat Aircraft.

Hasmukh Bhai and Chandrika attend Royal Wedding on 29th April

When Prince William and Kate Middleton walk down the aisle at Westminster Abbey, they will be in the company of the world's great and good.

But also sitting in the pews, in keeping with the couple's desire for a 'People's Wedding', will be a selection of characters from Miss Middleton's home village in Berkshire.Kate and William have invited a friendly postman, a trusted shopkeeper and his wife, the landlord of the Bucklebury village pub and their butcher to share their special day.

Mr Shingadia, who lives above their Peaches Stores shop, said: 'We're over the moon, absolutely thrilled. I have known Kate six years. 

'She comes in regularly. She has brought William in on about three or four occasions. The very first time it was mind-blowing to have a 

Prince in my store. He likes Viennetta ice cream – he buys that a lot.

'I've got to know him better each time. What's lovely about him is despite the fact that he meets a lot of people, he still remembers my daughter's name. 

Meera is only 11 but he also asks how she is getting on at school. It is incredible of him to do that and it shows he really cares and thinks about the people he meets.

'William came in a short while back when they were going to a friend's wedding in Gloucester. He asked how I was getting on and about my family, and I asked how his grandma was doing.'

There is some apprehension over the big day. Mrs Shingadia is agonising over what to wear. Her husband said: 'My wife checked with Mr Middleton whether it would be all right for her to wear her sari. She wanted to wear national dress and he said that's fine.

'We're going up to Wembley next weekend so she can choose a sari from the shops there. If there are none she likes, she is travelling to India next month and will buy one there.'

Another guest is postman Ryan Naylor, whose bag has been getting heavier by the day because of Kate's burgeoning fan mail.

Mr Shingadia said: 'Ryan came in at the beginning of the week, even though he is not our postman. He was so excited he wanted to tell us he had also been invited.'

The Shingadias are from the village of Bucklebury in Berkshire and would be seen at the Royal wedding among guests like Kings, Queens, Presidents, Prime ministers and other dignitaries. Hashmukh was born in Kenya but his parents are from India and he has known Kate, the Royal bride for the last six years. He and his wife Chandrika run the grocery shop and have been in the business for 12 years.

MEMBER OF INDIAN PARLIAMENT

                         

An Interesting blog by Pritish Nandy  I was an MP not very long ago. I loved those six years. Everyone called me sir, not because of my age but because I was an MP. And even though I never travelled anywhere by train during those years, I reveled in the fact that I could have gone anywhere I liked, on any train, first class with a bogey reserved for my family. Whenever I flew, there were always people around to pick up my baggage, not because I was travelling business class but because I was a MP. And yes, whenever I wrote to any Government officer to help Someone in need, it was done. No, not because I was a journalist but because I was an MP. The job had many perquisites, apart from the tax free wage of Rs 4,000. Then the wages were suddenly quadrupled to Rs 16,000, with office expenses of Rs 20,000 and a constituency allowance of Rs 20,000 thrown in. I could borrow interest free money to buy a car, get my petrol paid, make as many free phone calls as I wanted. My home came free. So did the furniture, the electricity, the water, the gardeners,the plants. There were also allowances to wash curtains and sofa covers and a rather funny allowance of Rs 1,000 per day to attend Parliament, which I always thought was a MP's job in the first place! And, O yes, we also got Rs 1 crore a year (now enhanced to Rs 2 crore) to spend on our constituencies. More enterprising MPs enjoyed many more perquisites best left to your imagination. While I was embarrassed being vastly overpaid for the job I was doing, they kept demanding more. Today, out of 543 MPs in Lok Sabha, 315 are crorepatis. That's 60%. 43 out of the 54 newly elected Rajya Sabha MPs are also millionaires. Their average declared assets are over Rs 25 crore each. That's an awfully wealthy lot of people in whose hands we have vested out destiny. The assets of your average Lok Sabha MP have grown from Rs 1.86 crore in the last house to Rs 5.33 crore. That's 200% more. And, as we all know, not all our MPs are known to always declare all their assets. Much of these exist in a colour not recognised by our tax laws. That's fine, I guess. Being a MP gives you certain immunities, not all of them meant to be discussed in a public forum. If you think it pays to be in the ruling party, you are dead right: 7 out of 10 MPs from the Congress are crorepatis. The BJP have 5. MPs from some of the smaller parties like SAD, TRS and JD (Secular) are all crorepatis while the NCP, DMK, RLD, BSP, Shiv Sena, National Conference and Samajwadi Party have more crorepatis thanthe 60% average. Only the CPM and the Trinamool, the two Bengal based parties, don't field crorepatis. The CPM has 1 crorepati out of 16 MPs; the Trinamool has 7 out of 19. This shows in the state-wise average. West Bengal and Kerala have few crorepati MPs while Punjab and Delhi have only crorepati MPs and Haryana narrowly misses out on this distinction with one MP, poor guy, who's not acrorepati. Do MPs become richer in office? Sure they do. Statistics show that the averageassets of 304 MPs who contested in 2004 and then re-contested last year grew300%. And, yes, we're only talking about declared assets here. But then, we can't complain. We are the ones who vote for the rich. Over 33% of those with assets above Rs 5 crore won the last elections while 99.5% of those with assets below Rs 10 lakhs lost! Apart from West Bengal and the North East, every other state voted for crorepati MPs. Haryana grabbed first place with its average MP worth Rs 18 crore. Andhra is not far behind at 16. But no, this is not enough for our MPs. It's not enough that they are rich, infinitely richer than those who they represent, and every term makes them even richer. It's not enough that they openly perpetuate their families in power. It's not enough that all their vulgar indulgences and more are paid for by you and me through back breaking taxes. It's not enough that the number of days they actually work in Parliament are barely 60 in a year. The rest of the time goes in squabbling and ranting. Now they want a 500% pay hike and perquisites quadrupled. The Government, to buy peace, has already agreed to a 300% raise but that's not good enough for our MPs. They want more, much more. And no, I'm not even mentioning that 150 MPs elected last year have criminal cases against them, with 73 serious, very serious cases ranging from rape to murder. Do you really think these people deserve to earn 104 times what the average Indian earns?

PAC Report

Please read leaked PAC report on 2G scam..............

http://scr.bi/krGZQQ

Close Your Eyes and Hear the Rain Fall....................

http://www.youtube.com/watch?v=CfP2uz8Q0-4

Power of a thought

When we walk in the Sunlight, we do feel the heat but the light doesn't burn our  clothing.  However, like in our childhood, when we hold a magnifying glass in the sunlight and put a ball of cotton underneath, it gets heated up and burns.  

Similarly, the power of a concentrated thought is immense. Experts say that we have about 60,000 thoughts per day.  Not all of them are potent to manifest immediately which is actually good for us as the time delay serves us to review whether we really want what we thought of.  But there are some thoughts which manifest and those are the ones which are so focussed like a laser beam and can cut through any obstacles to manifest into a reality.  With training we can acquire this skill of concentrated visualisation which is used even in Olympic programmes. When asked what's the one skill that needs to be learnt in life, a wise man said "it is concentration." 

 "All that we are is the result of what we have thought." - Buddha

Perils of Pension Plans ( excerpt from the Economist)

People in rich countries are living longer. Without big reforms they will not be able to retire in comfort, says Philip Coggan

Apr 7th 2011 | from the print edition

WHEN GERTRUDE JANEWAY died in 2003, she was still getting a monthly cheque for $70 from the Veterans Administration—for a military pension earned by her late husband, John, on the Union side of the American civil war that ended in 1865. The pair had married in 1927, when he was 81 and she was 18. The amount may have been modest but the entitlement spanned three centuries, illustrating just how long pension commitments can last.

A pension promise can be easy to make but expensive to keep. The employers who promised higher pensions in the past knew they would not be in their posts when the bill became due. That made it tempting for them to offer higher pensions rather than better pay..................

Without Comment......

Shop signage .....

RSK

 

 

4 photographers to look out for........

http://www.tehelka.com/story_main49.asp?filename=hub300411PHOTOGRAPHERS.asp

Abstract

Did you know, you've been investing in the dollar?

Deepa Venkatraghvan  Thursday April 14, 2011, 11:03 PM , the Economic Times

A couple of readers have talked about gold being a better bet for long term investing. But in all my interactions with financial planners and advisors, they have insisted that gold (not jewellery but coins, bars or ETFs) be limited to 15-20% of one's portfolio, purely as a store of value, a hedge against difficult times. So I decided to explore. Here are some of my observations. 

First, a quick look at the pros and cons of gold. 

The pros: It is a precious metal that is high on liquidity. It is an asset that you can see, touch and feel. Gold has aesthetic value if worn as jewellery. Gold does not have credit risk. To explain what that means, a bank or corporate can be badly managed and go bankrupt or shut down whereas gold does not have that risk. 

The cons: Gold does not generate intermediate cash flows (just like real estate would generate rent or equity shares would generate dividends). Because of that, one cannot put a value to gold like one can put a value to an equity share. Gold also does not have high utility value.

Next, can gold give good returns?

For this, let us see how gold prices have moved globally in the past 31 years. I have taken the gold price as per the RBI website. In 1978-79, the price of gold (London) was USD 208 per troy ounce. In 2009-10, it rose to USD 1023. The average annualized return (or CAGR) works out to 5.27% per annum. We don't have the official average for 2010-2011 but assuming it is USD 1400 the CAGR works out to 6.14%.

Now, let's look at India. In 1978-79, the average price of gold (Mumbai) was Rs 791 per 10 gram. In 2009-10, it was Rs 15,756 per 10 gram. The average annualized return works out to 10.13%. Assuming average rate for 2010-11 is Rs 19,000, the CAGR is 10.44%. 

The difference: 4.3%. Where does that come from? It comes from the appreciation of the dollar against the rupee. So in effect, in the past 31 years, we Indians have been investing in the dollar, believing that we are investing in gold. We have earned 4.3% from the appreciation in the dollar along with 6.14% in gold. 

One may question: So what if I made 4.3% from the dollar and 6.14% from gold? So now we are talking about two issues: gold versus equity and dollar versus equity. Let us see both.

Gold versus equity

In 1979, the Sensex was 100. Today it is 19000 – a CAGR of 17.82%. Now those who have made better return from gold have probably made it in the last 5 years. Let us compare. In 2005-2006, the price of gold was USD 476 in London and Rs 6900 in Mumbai. In 2010-11, going with our assumption, the price of gold was USD 1400 and Rs 19,000. The CAGR works out to 24% in London and 22% in Mumbai. During this time, the dollar largely depreciated. The Sensex average for 2005-06 was 8278 and today it is 19000, a CAGR of 18%. 

Dollar versus equity

In the last 31 years, the dollar has appreciated only around 5% per annum (CAGR). Moreover, the dollar is influenced by many more global factors.

Whether the dollar will recover in the future, we don't know. Whether gold will continue its majestic rise, we don't know. But here, allow me to make one more observation. In 1980-81, gold had peaked to USD 513. That was because people had lost faith in the dollar (Vietnam war etc) and rushed to buy gold as a safe avenue. Thereafter, the dollar recovered and from 1982 to early 2000s, gold remained in a range of USD 350-400. The recent peaks in gold have also been on account of a weak dollar. 

Indian equity on the other hand hinges on the domestic growth story. Of course I have not talked about the cons of equity, the key limitation being the extent of research and effort required to invest and monitor an equity portfolio. But cannot that be tackled with some education and perhaps the use of professional service? 

Food for thought? 

Till next time, Money Happy Returns!

CricTrivia

Q: During the World Cup final, Gautam Gambhir's bat was broken by a Lasith Malinga yorker - would he have been out if the piece that broke had flown back and dislodged the bails?

 Secondly, is it out if the ball hits the umpire on the full and is caught by a fielder? 

A: The answer to both parts of the question is yes, the batsmen would have been out. There has been at least one instance of a broken bat disturbing the stumps in a Test. The batsman concerned was South Africa's Billy Zulch, playing against Australia in Johannesburg in 1921-22: a ball from Ted McDonald broke Zulch's bat, and a fragment hit the stumps, dislodging the bails. He's shown as "hit wicket" on the scorecard. McDonald, one of the first truly fast bowlers, had been involved in a similar incident earlier in 1921: against England at Headingley he bowled a ball that broke the bat of Andy Ducat (who was playing in what turned out to be his only Test). The broken bit hit the stumps, but the ball was caught in the slips anyway - by McDonald's partner in high pace, Jack Gregory - and Ducat is down as caught on the scorecard. 

As for the ball hitting the umpire, if it bounces away to a fielder then that would indeed be out if caught on the full. This happened to the Nottinghamshire batsman Ian Moore in a county match in the 1960s, according to Moore's obituary in the new Wisden: "He once smashed a ball straight back down the pitch," said his former team-mate Mike Smedley. "The umpire couldn't get out of the way and it hit him, then bounced away and he was caught at mid-on."

Every one loves lawyers !

A truck driver used to amuse himself by running over lawyers he would see walking down the side of the road. Every time he would see a lawyer walking along the road, he would swerve to hit him, and there would be a loud "THUMP" and then he would swerve back on the road. One day, as the truck driver was driving along he saw a priest hitch hiking. He thought he would do a good turn and pulled the truck over. He asked the priest, "Where are you going, Father?". "I'm going to the church 5 miles down the road!", replied the priest. "No problem, Father! I'll give you a lift. Climb in the truck". The happy priest climbed into the passenger seat and the truck driver continued down the road.

Suddenly the truck driver saw a lawyer walking down the road and instinctively he swerved to hit him. But then he remembered there was a priest in the truck with him, so at the last minute he swerved back to the road, narrowly missing the lawyer. However even though he was certain he missed the lawyer, he still heard a loud "THUD". 

Not understanding where the noise came from he glanced in his mirrors and when he didn't see anything, he turned to the priest and said, "I'm sorry Father. I almost hit that lawyer". "That's okay", replied the priest. "I got him with the door!"

Malwa Premi

Trying to find the aesthetic with the lens of history...

Thursday, April 21, 2011 18:28 IST

Anthropologist, art historian and professor of anthropology and visual culture at University College, London, Christopher Pinney   ( http://www.christopherpinney.com/) believes the Empire follows art and not vice versa. He uses this hypothesis in the context of modern India extending the privilege of aesthetic and figural excess to much broader social and political practices. DNA's Yogesh Pawar caught up with him on the sidelines of a lecture in Mumbai. This is the unedited version of the full length interview which was carried on April 19^th:

Why is someone who has lectured at universities like Northwestern, Goldsmiths, Princeton, Johns Hopkins, Harvard, and Columbia and with your academic background interested in rural India?
Why not? I should ask. (Laughs) From the early 80s when I went to the Malwa region in Madhya Pradesh I have been fascinated with the rich socio-cultural tapestry of rural India and what it has to offer in the way the aesthete there plays out even as the culture, economics and
politics often tug in different directions.

I have a Kiplingesque connect with India. Though born in Sri Lanka, as a six-year-old when we went to Europe by sea, and the boat stopped at what was still Bombay. I have a distinct memory of walking ashore with my father at this beautiful sunlit place, between the rains of Sri Lanka and "the blasted hellish drizzle of England"... it must have lodged itself in my subliminal consciousness! The other reason for myinterest in India was my grandfather, who had been in an artillery unit in North India, and was never as happy as he had been then. I got from him the sense that India was somehow very important. So, from early on, I had the idea that a life that didn't involve spending time in India would be incomplete.

But I actually came to India to work on the industrial labour question, inspired by reading the work of the great British labour historian EP Thompson. Anthropologist Adrian Mayer, who'd worked in Dewas, suggested I go to Malwa and I thought, that's the place for me.
I met workers in their houses and the chromolithographs on the walls made me interested in that aesthetic. People I met showed me their photographs. Also, I was constantly being asked to take photographs of villagers. That was when it struck me that there was something here worth studying: a local aesthetic of legibility that was offended by shadow, by contrast.

Much of your work including Camera Indica: The Social life of Indian Photographs, Photos of the Gods: The Printed Image and Political Struggle in India, and The Coming of Photography in India takes a look at the world through the lens of history. Would you say that the
status of photography in India has changed, from the colonial period till the present day?
My first book, Camera Indica, was divided into two parts. The first part was about colonial photography, which I argued was about surveillance and identification, often involving the imposition of identities upon Indians that they may well have resented. So photography, in its early Indian incarnation, came out looking like a villain. The second part of the book was a celebration of local Malwa village photographic practices: overpainting, fantastical backdrops, artisanal collage and montage work which, to me, represented a postcolonial Indian resourcefulness. These photographers were extraordinarily witty and inventive, disrupting the normative space of
Western photography, the desire to fix an identity within the frame.

I've returned to many of these themes in my forthcoming book. Except that now I would argue that creativity, projection and what I call prophecy is a characteristic of all photography, not just small town Indian vernacular practice.

As you've argued in Camera Indica, the studio becomes a place where rather than reiterating pre-existing identities, individuals could explore identities that did not exist in the social world.
Exactly. Photography lends itself to a kind of fantasy. You're given a space in which to enact an identity. And photography's peculiar magic is that it gives you a record of that moment, so that to ask whether that is or is not the real you is not an appropriate question. All photography has that potential - it allows you to come out better.
Pictures are not just illustrations of things we already know. I'm interested in picture-making technologies as avant-garde projects that make worlds.

To come back to your hypothesis, isn't most art a slave to patronage and hence will it not follow the empire/ establishment and not otherwise as you suggest?
Eco-political aesthetics, after all is the primary motto of all political transformation. We have to look at how the economic infrastructure, ideological thought processes and sociological narrative consolidate to form the reality we live in to understand this. Its like the aesthetic which made Europeans attracted to say the bright colour of Indigo or how the rising pepper prices made Columbus set out on his expedition. There are enough engravings which celebrate these seemingly unconnected triggers which set off an entire course of history and politics.

Many feel Indians as people revel in the ugly and cite the completely-removed-from-any- Indian-sensibility phallic Mumbai highrises or the Punjabi-Gothic loudness ofthe new look Delhi homes. Do you feel that we have lost all sense of the aesthetic?

I wouldn't go as far as that. I still feel the everyday aesthete of rural India is still immensely beautiful, but you are right about the utter lack of any historical sensibility or heritage patina to the over all understanding. In the village in Malwa where I work there was a raised stone platform with twin shiv lingas and yonis under banyan tree out in the open. This structure could easily be over 500-years old. Now the villagers have gotten together and built a brightly coloured temple 'to protect' the shrine. For reasons of convenience in maintaining they have chosen bathroom tiles for the walls both inside and and out. What this does to the serene beauty of the original
structure is too strong to say in words. But then maybe there is after all some sense in this aesthete too which is beyond us.

There is also the unique circumstance of multiple global intersections that one has to factor in. This is how even in the most remote village, a flashy new-fangled mobile will be whipped out with flourish to look at the tithi or thechaughadia of the day.

You're new project also works with Dalits using modern technology to improve their acceptance by upper caste Hindus
That is right. In a village near Ratlam the villagers say they've seen a five headed snake once every year at Naga Panchmi fleetingly. It had never been photographed before since it was presumably lithe and quick Yet am image was generated thanks to the local Suhaag studio and some ingenious photoshop by a Dalit devotee who has gained new found respect in the village.
The Dalits also want the entire process of how some of them come to be possessed by Gods and Goddesses recorded on video as this will prove that they are not lying and improve their acceptance. So advanced technology also keeps playing with the various narratives we mentioned
earlier.

But aren't you doing exactly what many European scholars are accused of doing by romanticising / mocking Indian superstition?

This discomfort with my work is largely metropolitan and there are many who see this as some 'new kind of Orientalism.' These images have been called superstitious by the rational 'modern' India and it marks a point of collision between two Indias. Mind you, I am not saying this is the real India. There are many and they often misunderstand each other. These images are, in fact, a response to global angst about the planet and we would do well not to ignore these or dub them
as kitsch. They need to be understood as a sign of our times.

Isn't this kind of existence then in way schizophrenic? On one hand you want the latest gadgets and aspire to eat at McDonald's and on the other you still think nothing of being stuck in age-old superstitious beliefs...

Unfortunately yes, the role models are urban and often out of sync with ground realities. Not that the authorities or government are making it any easier. The government thinks bringing latest mobile technology is a priority when it is crystal clear that the rural poor want uninterrupted power supply to run their threshers in the field for at least an hour at a time. This yawning gap between the 'felt' and 'assumed' need can be quite frustrating.

Doesn't this warrant a revolt?

Despite the legendary resilience of the rural poor, I must admit that I sense a shift. Nobody wants the Naxal menace to spread but we have to find out why outfits like BSP are finding gradual acceptance. In a small Malwa town when a statue was being installed in thepublic square, the upper castes wanted a Maharan Pratap but the Dalits have said they want it to be Babasaheb Ambedkar. Even until a decade ago this would have been unthinkable. The public and political space has been monopolized for far too long by the Nehrus and Gandhis. The Dalits and marginalised realise that if they have to sit at that table they will have to assert themselves. Even if this means, indulging in politics of spectacle themselves.

However much they may be derided as megalomaniacal, the Ambedkar Udyans of Mayawati need to be seen in this perspective.

Do you feel the entire narrative of political discourse in India is now slave to image only/ Is that why we see such a chaos of symbols and symbolism in everything Indian politicians do?
This has indeed begun to spin a bit out of control, yes. One of the most powerful examples of a party victim of its own image came with the 2004 NDA government India Shining campaign which the BJP then appropriated as its election campaign. And the election was lost at a level of the image. The aesthetic experience was completely incongruent with the political and economic grievance.
Psephologically, despite everything being pro-BJP, the images of the campaign cruelly amplified the grim realities. The Congress relied on a black-and-white Bimal Roy-Mehboob Khan mould campaign and romped to victory.

Given the intense disparities, corruption and polarisations do you then see any hope?

If you ask the Anna Hazares of the world you will get 'no' as an answer. But I see hope. The NREGS may have its imperfections in implementation but it is making a difference. Yes 1992-93 was blot but look at how Mumbai and India dealt with 26/11 and it fills you with hope
.

Obituary : James Mcgilligan

Joy of Science

http://www.ted.com/talks/anil_ananthaswamy.html

Are you suffering from Mental Accounting ?

Are you suffering from Mental Accounting ? Posted: 19 Apr 2011 03:30 AM PDT Do you know that majority of the problems in your financial life are purely because of psychological reasons? We are all humans and are prone to think irrationally at times, due to which, a lot many wrong decisions are taken in our personal finance. Behavioural Finance is the area of finance that combines psychology and finance together and gives you an insight as to how a common man makes mistakes in his decisions. Today, I am going to talk about on its concept called 'Mental Accounting'. Lets imagine a scenario, which will give you a brief idea on mental accounting . Scenario 1 : You and your wife visit an electronics showroom with the intention to buy a Laptop. After browsing various products you finalize a nice laptop with the price tag of Rs. 40,000. Just when you were to swipe your credit card, the couple behind you mentioned that another showroom about 3 blocks away (15 min drive max) is selling the same laptop for Rs. 39,800. Will you consider driving 15 mins to save Rs.200? Majority of us will not do so! Scenario 2 : You and your wife visit the same electronics showroom to buy 4 GB Pendrive costing Rs.400. However, you come to know that this product is available for Rs.200 at another showroom which is 15 mins drive. So will you now choose to drive another 15 mins to buy this Pendrive? Most of us will happily choose to drive 15 mins to the second showroom. If you look at both the scenarios, you will notice that both scenario 1 and scenario 2 are exactly the same, they both will save you Rs. 200 and both requires you to drive 15 min. Exactly same, no difference. But most of the people will choose the first showroom only in scenario 1 and will choose second showroom in scenario 2. Why does this happen ? Truly speaking, this happens because of Mental Accounting which makes Rs. 200 saved on laptop not a significant amount because its just 0.5% of the original price. Whereas, Rs. 200 saved on Pendrive looks attractive and substantial bargain because its 50% of the original cost. What is Mental Accounting ? Mental Accounting is very simple to understand. What makes is a crucial aspect to understand is the different ways we treat money depending on situation and its source. We often concentrate on the situation and the source of money in terms of the amount of hard work we put to get that money and all these points makes us human to fall prey to treat same amount of money in different ways. But coming back to the facts, Money is Money and it doesn't matter where it comes from! So, if you earn Rs. 100 from 3 different sources- Lottery, Salary or Tax Refund, all of them should mean the same as they all have the same purchasing power. Forget how you got it; all of that Rs.100 is valuable equally! Personal Experience of Mental Accouting Let me share on how I myself was a victim of Mental Accounting. Some 2 years back, when I did my first stock market trade in F&O. I made Rs. 2000 as profit on an investment of Rs. 6000 in the matter of 2 hours (options trading). This increase of Rs. 2000 actually increased my overall wealth, but to me it was 'Cheap Money'. Naturally, I had made plans to spend this money and I had no 2nd thoughts on NOT spending. The decision to spend money was not at all rational, but it was fast money which came from stock market and it came without any hard work. Mental Accounting was doing its job in my mind!! Carefully evaluating the situation, all what happened here was that my networth went up by Rs. 2000 and I took out Rs. 2000 and SPENT it!     6 Examples of how our personal finance decisions are based on Mental Accouting 1. Treating some money as "Free-Money" or "Loose-money" Most of us label money based on where it comes from, by doing so the value of that money appears to be less. E.g. if you get food coupons from your company, you will not consider it as cash! At the last company I worked at, it was amazing to see that people didn't mind paying up to Rs.50 for Food Coupons for friends, but if the same person had to spend Rs. 10 hard cash, he will not be willing to do so. Food coupons have same purchasing power (at least in limited environment) as cash, so one should be treating it in the same way and not being bias just because it's not in the form of currency. What I really want to know is that what will happen if companies start providing cash equivalent of these food coupons??? Another example can be with the money that we get from tax refunds, cash gifts on events etc…etc… We all in our heads label these as 'Cash, but not as valuable'. Imagine that you got Rs. 2000 as your tax refund and you are more likely to be spending this money rather than the willingness you would have to spend from your salary. Also imagine that some friend gave you Rs. 1000 as gift voucher, will you even bother researching on what products can this voucher buy??? In the same way, if you earn yourself a bonus of Rs. 50,000; you will be more inclined to spend it on a holiday or for buying some item for the house. Would you do the same thing with the money from your salary?? So the message is clear, don't label money as 'salary money', 'tax refund money', 'bonus money' or 'Gift money'. It's just MONEY! 2. Holding Stocks and Mutual funds with Loss Mental Accounting is visible in buying and selling of equity products like stocks and mutual funds. Consider a person who bought shares at Rs. 100 each and the current price drops to Rs. 80. He does not consider this as loss until he books it, loss is not existent for him, and it's just a possibility. But in real terms, that person is actually suffering loss already. The person in this case labels the loss as 'potential' and not 'real'. On the other hand, if the same stock went up from Rs. 100 to Rs. 120, he will be happy and will be telling everybody that how he is in 'profit' even though he has not booked as yet. Profits have already happened according to this person's thinking and this is exactly why many people fail in stock investments. 3. Size of the decision/money involved A lot of times the size of the transaction also influences our thinking. Imagine that you went to buy a Plasma TV which costs Rs 20,000. You bargain with the vendor and successfully get a discount of Rs 500; it makes you happy and you feel as if you saved something. But do you put any big effort to find out how you can save much on groceries or vegetables? As the transaction size is bigger and bigger money is involved in case of Plasma TV, it clicks your mind that you should try to bargain the price and save as much as you can, but this thinking is not the same in case of small purchases. Even if we are able to save Rs 5 on small transactions, it would amount to Rs 1700 (approx) in saving in whole year and that would be bigger than Rs 500 saved in case of Plasma TV. While there can be repetitive headache involved in saving that small amount, the whole idea is to communicate that we tend to think differently when there is a big decision and very different when in smaller ones. 4. Earn less interest and pay more interest Many investors do the common mistake of earning less interest on their FD's, PPF or Cash in their Savings account, but pay huge interest on their personal loan or credit card interests. For investors, money in FD's and PPF is 'safe' and not to be touched, but in true sense you are earning less on a part of your portfolio and from that same portfolio you are paying huge interest for loans. If you see your whole portfolio as one and single element without labelling parts of it, your perspective will change. Ideally  one should clear a liability whose interest rates are higher than the part of portfolio earning lesser interest . But due to mental accounting , this idea does not look fine to many people . 5. Labeling money into safe money and risky money , loosing any money is just loosing Ajay has Rs 1,00,000 in Bank FD, Rs 2,00,000 in his PPF account and 5 lacs in Balanced Mutual funds. All these investments are for his daughter's education down the line and he has mentally labelled it as 'safe'. However Ajay has also separated out Rs 50,000 to try out stock trading which is his passion and what he loves to do. He has mentally labelled this Rs 50,000 as 'Risky'. You can see his total worth is 8.5 lacs. Case A: Now imagine he is in loss of Rs 25,000 in his stock trading. This will not hurt him so much as he had accepted from start that it's for stock trading and loss was a possibility. He is fine with this loss, as nothing has happened to his 'safe' investments. Case B: Suppose market is down and he faces a loss of Rs 25,000 on his mutual funds. As the loss has happened in his mutual funds which was initially labelled as 'safe' and "for-his-daughter's-education", the level of disappointment and worry would be much bigger than Case A. Even though the reaction of Ajay was different in both case A and case B, it's purely because of mental accounting and the way he had unconsciously labelled both investments of his portfolio, but in both the cases the reality is that his total net worth went down from 8.5 lacs to 8.3 lacs, It's as simple as that. 6. Paying for Financial advice We recently encountered a very funny situation, one of the readers contacted us for our Financial Coaching service, he was very clear that he needs it (For readers who are not aware about financial coaching, it's a paid program where we coach people in their financial life just like Garry Kirsten coaches Indian cricket team and transformed their performance). He was very much interested in being coached on his finances and what MONEY means to him, but was very uncomfortable paying the fee out of his wealth, as for him there were other important things in life; he said he would get back to us once he makes the decision. But he didn't communicate for weeks, then just last week he told us that now he is ready for Financial Coaching. After we started his work, we asked him, what had happened in his life which motivated him to take our service. To our surprise, he had sold his old car and got price way beyond he expected, and he was fine to use that extra money to improve his financial life. If you look at this incident closely, even the money which he got by selling his old car become the part of his overall wealth, the moment he sold it, in fact it was always part of his wealth even when he didn't sold it. You must be thinking what was our first   coaching lesson for him? Yes, it was the way he looks at different aspects of his financial life and not fall prey to these kinds of behavioural patterns. 7. Treating unexpected money in a different way There are lot of unexpected money at times coming in our life , It can be money in form of Bonus from your company , It can be money recieved from an old friend who took it from you ,didnt give back to you and you also forgot about it. It can be some money you find in old book which you had secretley kept long back . All these are examples of "unexpected" money and hence there is no mental accout for it , that money looks more of pocket money to you and you tend to spend it without thinking much .. However money is money , no matter from where it came . Its just different in your mind .