During the course of a sales pitch, a seller might take some creative license with the facts. I call this the “Trust but verify” commandment. Thou shalt not accept the stated word but instead always get it in writing. And if the greatest minds can be fooled, what can the rest of us do? Embracing our own fallibility is a good start. A towering intellect didn’t shield him (or other geniuses throughout history) from making foolish choices with their money. Sir Isaac Newton, for instance, lost a fortune investing in England’s hottest stock - the South Sea Company. When salesmanship is at play, intelligence can take a holiday. Thou shalt not ever believe thou art too smart to fall for bad investments.
Is the $99 printer really a deal or is someone counting on you to spend $500 a year on ink cartridges? Why does that free 30-day trial subscription require a credit card number if the seller isn’t counting on you to forget to cancel? Reverse roles and think about how someone is profiting from your purchase. How does the company behind the product make money? What’s in it for the person selling you this product? Prior to making a major purchase, you can protect yourself by reflecting on two key questions: Thou shalt put thyself in the seller’s shoes before buying. In fact, the ritzier the restaurant, the worse the “opportunity” on the table, since expensive marketing can be justified only by selling products with juicy profits. Whether an investment, a time-share or a multilevel marketing program is on the menu, that free lunch will cost you. The next time someone invites you to a meal so you can learn about a new way to protect or increase your wealth, politely decline. Thou shalt remember there is no such thing as a free lunch. Take this commandment a step further and never buy an investment you can’t explain to an 8-year-old. So it’s critical to understand what you’re buying, what it costs and why it’s right for you. So why do people get pitched so many complicated investments? My fervent belief: Those perplexing features are designed to obscure and excuse the seller’s profits. Simple and transparent products are almost always superior to more complex alternatives.
Thou shalt not buy an investment before completely understanding it. Wait until your emotions have settled before signing anything. Expert salespeople will stoke fear to sell security systems or identity protection they’ll stroke your ego to sell you a car that’s just out of your price range. Plucking emotional strings can persuade potential customers that they not only want a product but desperately need it. When there are sales to be made, there are people out there who can play you like a fiddle. Thou shalt not forget that skillful salespeople can manipulate thy emotions.