opportunity cost
Mother: Chinmay, the bike of yours that is in the garage, you hardly use it. Why don’t you sell it?
Me: (being a hardcore fan of the Royal Enfield Bullet I felt insulted and replied with a higher tone) MAAAA… it is not a bike! It is a Royal Enfield BULLET!
Mother: whatever, it is leaking oil and messing up the place.
Me: (again, as a hardcore fan with a cheeky voice I said) it is only marking its territory.
Mother: What?
Me: nothing
Mother: a few weeks back you mentioned that if any asset is not used then it becomes a non-performing asset. Then why did you buy that bike or bullet of yours if you were not going to use it?
Me: hmm… I bought the Bullet back in 2009 when I did not have much finance acumen. As you know, I did not have the habit of saving, so, I decided to buy it for Rs 20,000 even though it was not in running condition (It was a 1971 model). Then I wanted to force myself to rebuild it by putting aside Rs 5000 – Rs 10,000 every month, and hopefully selling it for double or triple the price after a year or so as it might have that vintage value.
Mother: then why haven’t you sold it yet?
Me: I knew you would corner me with these kinds of questions.
I don’t know if you remember it took over a year and a half to get it rebuilt as I was very particular about getting the genuine parts for the bullet. And I spent over Rs. 150,000 to get it done.
I still remember a week after it was ready someone offered me Rs 200,000 but I wanted to show-off by riding it for a while and thought I might sell it for a much higher price.
Mother: and then you went back to Australia, and mostly stay there all these years.
Me: yup!
Mother: at what price do you think you can sell it now?
Me: not sure, I haven’t checked as I don’t want to sell it. I will probably keep it as a vintage vehicle as it is now 50 years old.
Mother: do whatever you want but do not buy another one. I know you have your second Bullet in Agumbe.
Me: hmm… no, I don’t think I will buy one more.
Mother: how surprising? Why so?
Me: because of opportunity cost!
Mother: what’s that?
Me: instead of spending Rs 150,000 on rebuilding the bullet, if I had invested the same money in buying ‘Eicher Motors’ shares who owns Royal Enfield Bullet, then it would have given me 100 times return.
Mother: what??? You mean Rs 15,000,000 (1.5 Cr)
Me: (with a low voice) yes…
(I thought my mother might say you are such an idiot… but mother’s heart had a different response)
Mother: (gently rubbed my head and said) it’s alright, it is not the end of the world. I am still proud of you.
Me: (was speechless for a while)
Mother: so, this is what you mean by opportunity cost?
Me: yes, there are always opportunities. Some we see and many we miss.
Mother: anyways, I am sure there are many other opportunities waiting for you. Now, let us focus on celebrating your niece’s birthday.
(Today is my niece’s 4th birthday. Taking her on a jolly ride on my Royal Enfield Bullet… priceless!)
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I once asked a mentor of mine on how to spot opportunities, he simply replied,
do not see, observe;
do not hear, listen;
do not talk, converse.
In simple words, be completely present (it is an ongoing challenge for me so far) because opportunities are everywhere.
“Opportunities are seeing things that others are not able to see.” – unknown
NOTE: I am neither giving any financial advice nor encouraging you to invest in the share market. My intention is to create financial awareness so that you keep an eye out for opportunities. Please do your own research before investing.
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