Posts Tagged ‘top tips’

We buy things every day. From family homes to new shoes.  It is a part of life however no one likes to get ripped off or buy something they don´t ultimately need.  So in order to lower your chances of making a bad decision ask yourself these simple questions when you are just about to buy.

If you find that you answer negatively to a few or more of the following questions then you should think more about whether you need to buy it.  If you answer all questions positively then it is safe to proceed.

LOOK FOR RED FLAGS

THE PRODUCT

Can you see it? Can you touch it? Does it work? Could it be damaged without you knowing?  Is it a fake?

THE SELLER – WHAT IS IN IT FOR THEM?

A big question you should always ask.  Could this make them bias as to the information they are giving you?  Do they appear trustworthy? Are there any testimonials or reviews?  What is the likelihood that they deliver top quality products? (difference between a street seller, market seller, internet seller, branded high-street store).

THE SITUATION

How do you feel?  Are you in a notorious tourist market? Are you starving at the supermarket? Are you emotion today and shopping for shopping´s sake?

PUT IN CONTEXT

COMPARISONS

Do you have comparisons? Do you have any direct comparisons?  Comparatively is it high quality or good value?  Proceed with extreme caution if you have no comparisons or go and find some comparisons to check the value, price, quality and suitability.

How does it compare to the others? Would you say this is exactly what you are looking for or is this the best option available at the time? Are you OK with that?

What is the OPPORTUNITY COST?

What would you be giving up to go ahead with this purchase? Once you have paid for something that money cannot be used on anything else so make sure you are using your money wisely, think what else you could use that money for and decide if the purchase is still the best option for you.

NOW VERSUS LATER

Do you need it now? Is there a benefit to having it now or waiting till later?  Could the price change or there be a better option in the future?

QUALITY OF LIFE

Will it make you happy or improve your lifestyle?  Sometimes happiness is enough as we are here to enjoy ourselves but just don´t use this reason for every purchase.

FINALLY - IF YOU ARE NOT SURE WALK AWAY

Walking away lets you view the situation from a different perspective, if you leave the shop and move onto the next and don´t think about it again then it is probably good that you did not buy it. If not and you go back and buy it, then you know it was not an on-the-spot emotional decision.

SO REMEMBER TO THINK ABOUT:

Product

Seller

Situation

Comparisons

Opportunity Cost

Now vs. Later

Quality of Life

Hope that helps and gives you somethings to think about next time you are trying to decide on what to buy.  Remember every time we buy something we are making a financial decision so it is useful to get into the habit of using financial analysis (like what you have just done above) to make informed decisions.  And once you make smart buying decisions this will lead to more money to save, invest and enjoy nicer things at a later date too.

You can profit a lot from reading people´s opinions as long as you know how to read them effectively.  Investment opinion articles and personal finance articles are very common nowadays.

However, opinions can be helpful or misleading so it is important to determine whether you agree or not with them by using these top 12 tips and some critical thinking.

1. Set Your Expectations

You will never find a no-risk guaranteed high-return investment written in an opinion article – so don´t look for one or believe it if someone tells you it is one.

2. Don´t Miss The Boat

Wait, isn´t it the other way around? If you read about it in the papers you have ALREADY missed the boat?  A tricky one this. If you are investing on that one piece of news (i.e. Google profits soar 50%) then you have already missed the boat (professional traders would have traded on that news earlier). However if the opinion talks more about long term initiatives or the future then you may not have missed the boat.  Remember, Rome wasn´t built in a day and you are looking for nuggets of news that gives insight into how things may be in the future.

3. Know Your Source

Always ask two questions: what have they got to gain from writing this article? and; why should they be considered an expert on the subject?   Weigh up the negatives and decide whether it is a reliable source.  Read marketing materials with caution.  Any post of the internet should be regarded suspiciously as you don´t know their expertise level.  Even newspaper articles should be read with some scepticism as they are written to sell papers so sometimes their opinions are exaggerated.

4. Understand What Is Being Said

If there are some words, concepts or acronyms you don´t understand then it is either a badly written piece or it is not meant for your readership. That being said the more you read the more you will understand so keep picking up investment opinion articles as the good ones will explain new concepts and ideas to you in a way you will understand.

5. Does It Make Sense?

Does their reasoning sound reasonable?  You may understand it, but now you need to take it one step further and decide whether their opinion makes sense. Try and follow their reasoning and decide whether you agree or.  Cut through any waffle and get to the reasoning and then ask yourself “does that sound realistic?”

6. Play Devil´s Advocate

Come up with reasons and an explanation for a counter-argument.  Which argument do you think is stronger, the article or the counter-argument?

7. Demand & Supply Rules

The most fundamental economic concept needs to be considered every time you read an investment opinion piece – simple as that.   What is the demand for such investment? Why might the demand increase in the future? Are we still going to need this in the future? Secondly, how much supply is there? What are its competitors?  What are it´s competitive advantages? Why might supply for this product or a substitute product increase/decrease in the future?

8. Take Out The Emotion

Yours, theirs, or anyone else´s you ask.  Emotions don´t help us make good investment decisions.  If it is an emotional subject then you have to recognise this and decide how this might add bias to people´s opinions.

9. Formulate Your Opinion

Try and take away from the article your opinion about the subject which you can support with reasons. Or, if you don´t have an opinion, try and formulate some questions you would like to answer in order to form an opinion.

10. Always Get A Second, Third, Fourth Opinion

Never decide outright on just one opinion. Look into the subject further.  Internet searches, additional newspaper articles, opinion of a trusted financially-savvy source.  Obtain additional opinions and reasoning following these top tips.

11. Discuss further

Discussion will enhance your understanding of the subject.  Many people like to discuss these topics, either in forums, internet groups, interested friends, family friends, financial coaches.  You can discuss a subject generally or specifically. Try and get the other person´s view before you give your own.  Gauge people´s responses but always “know the source”.

12. Awareness, plans, results – possible next steps

Increasing your awareness about investments and personal finance unlocks the door to possible new ideas and opportunities.  If you find something that looks interesting then look into ways you can gain more understanding or expertise.  A financial coach can help you simplify saving, investments and your personal finance options in order to help you develop a plan based on your personalised goals and objectives.   It is a way to grow your savings and understanding at the same time.

Happy reading!

If you have enjoyed this post please sign up to our RSS feed or our Facebook Fan page to receive further posts and more useful personal finance tips and advice.