To Stay Financially Secure, Carve These Guidelines in Stone
By Saghir Aslam
Rawalpindi, Pakistan
(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfill their religious and moral obligations towards charitable activities)
Over the many years of my work as investor, I have learned some important rules about money. They are so important, in fact, that I consider them commandments. Follow them to the letter and you will be a better steward of your money. Ignore them and, well, there will be hell to pay.
I. Thou Shalt not forget that skillful salespeople can manipulate thy emotions.
Expert sales people can play you like a fiddle. They will persuade you that you not only want a product but desperately need it. They will stoke fear to sell you a security system; they will stroke your ego to sell you a car. Let your emotions subside before you buy.
II. Thou Shalt not buy an investment before completely understanding it.
Easy to understand products are almost always superior to more complex alternatives. So why do people pitch you complicated investments? I believe those perplexing features are designed to obscure and excuse the seller’s profit. So it’s critical to understand what you are buying, what it costs and why it’s right for you.
III. Thou shalt remember there is no such thing as free lunch.
I mean that literally. That next time, someone invites you to a meal so you can learn about a new way to protect or increase your wealth, politely decline. Whether an investment or a time-share on the menu, that free lunch will cost you. In fact, the ritzier the restaurant, the worse the “opportunities” on the table, since expensive marketing can be justified only by selling products with juicy profits.
IV. Thou shalt put thyself in the seller shoes before buying.
Prior to making major purchase, you can protect yourself by reflecting on to key questions.
1. What’s in it for the person selling you this product?
2. How does the company behind the product make money?
Why does that free 30-day trial subscription, for example, require a credit card number unless the seller expects you’ll forget to cancel? Reverse, roles and c consider how someone is profiting from your purchase.
V. Thou Shalt not ever believe thou art too smart to fall for bad investments.
When salesmanship is at play, intelligence can take a holiday. Sir Isaac Newton, for instance, lost a fortune investing in England’s hottest stock-the South Sea company, towering intellect didn’t shield him (or other geniuses throughout history) from making foolish financial choices. And if the greatest minds can be fooled what can the rest of us do? Embracing our own fallibility is good start.
VI. Thou shalt not accept the stated word but instead always get it in writing.
During a sales pitch, a seller might get creative with the facts. Is the deposit really refundable? Can you really cancel your subscription at any time?
The answers to these question may be in some 25-page disclosure document; check that it matches what you’ve heard. Even an emailed promise from a salesperson can give you a chance for recourse
VII. Thou shalt not buy anything that is too good to be true
If it looks too good to be true, it probably is, of course. Our brains, however, never get that memo, so you must always rein in you emotional response, I’ve been offered free cruises and free cell phones, for example. But the cruise booking fee was more than the retail cost of the cruise, and the free phone would have locked me into a contract.
VIII. Thou shalt avoid (like the plague) limited-time offers
The ticking clock is powerful sales tool, you are presented with an opportunity that is so amazing that everybody will want in on it. Demand is eclipsing supply, so you must act now or forever lose out.
If you are told you have to buy now, don’t. One system in our brain relies upon instinct for fast action; another system draws on logic and rules more slowly. That “limited-time offers” dangled before you is designed to trigger your instincts before your logic can kick in.
IX. Thou shalt not depend upon regulator for protection
I’ve never seen firsthand a financial regulator order that a consumer be reimbursed for losses. I doubt that regulators in nonfinancial areas are anymore effective. It’s better to make the right decision initially than to count on a watchdog to bail you out.
X. Above all, thou shalt not forget that people separate thee from thy money.
In the pursuit of cash, most people want as much of yours as they can get. They usually go after it legally, but sometimes they do so in a way that’s questionable ethically. People regularly prey on our quirks to get us to open our wallets. Heed that truth and act accordingly.
(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)
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