Don’t get caught in the monkey trap

The Indian monkey trap is an age old method for catching live monkeys. Here the monkey catcher just used monkey’s curiosity against them. A narrow necked ceramic/clay bottle with a bulbous bottom, similar to a Carafe, is tethered to a stake in the ground or a small tree using a vine or rope fastened around the narrow neck. Various items such as nuts or firm fruit are put inside the bottle or vessel and left in locations where monkeys are known to inhabit. The monkey’s curiosity is aroused by the vessel and will put his hand into the jar to find what is contained, will grasp the bait and will attempt to remove them within their clenched fist. They are trapped by curiosity, and are unwilling to release the contents within their clenched fist. We might consider the monkey foolish, since to escape the trap, all they need to do is to release the bait! 

It seems so obvious to us...just let go of the food, release the bait and run away. It is so simple. 

We as a human think better than monkeys. Do we? 

Look at your financial life, you could easily find the places where you had your hand in the  narrow necked ceramic/clay bottle. The financial traps are

• Home/Car Loan: most us just take loan for home/car which is may not required at all. for a loan 20 years we have to pay 2 to 3 times. I am not say we should not have your own house but we move far ahead and took second home for rental income. here is the trap.

• Endowment Policies: There are many people consider the insurance products specially Endowment or money back policy as an investment. Which should not be the case. In such policies we can only earn 5 to 6 per anum which is actually a - ve return if you take inflation in the calculation. A term plan is the best product if you are thinking to insure yourself.

• Bank FD/RD : Investments in bank FD of banks are widely considered as the wise and the safest option. But the real return after adjusting for inflation and tax applicable is really negative. We feel very safe with the FD but share of same safe bank become very risky for investment.

• Day Trading : Many times we are trying to get some quick money which may not be worth taking risk. You  may make money in trading but not always.Warren Buffet says “If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes”. 

• Blindly Following Big Investor : We are just looking for Multi bagger and trapped in a script following a well known Investor. All we witnessed the movement in JPAssociate. It just jumped to 30 from 15 and again came to 16.

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