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When blind spots are financial, they can work against us, unintentionally destroying our good efforts to make progress with our money. Proactively searching out the aspects of our financial lives that we’ve neglected can yield many rewards, financial and otherwise. Here are the three most common personal finance blind spots and there is a high probability that you have at least one of them. The following are the blind spots to avoid in financial crisis.
- Not Saving Enough
- Buying High-Cost Investment Products
- Taking too much Risk
As yesterday we saw what is Financial Risk on ‘Not Saving Enough‘ we will see about ‘Buying High-Cost Investment Products’ today.
Buying High-Cost Investment Products
1.Buying whatever you are asked to
The worst financial products pay the highest commissions. And salesmen push the products that have the highest commissions. So, if a salesman is pushing you to buy a product, it is probably a bad product insurance investment policies, structured products and credit risk funds. The best products are usually not pushed by anyone. You have to make the effort to find out about their features and buy the most suitable products.
2. Overpaying
If you pay higher-than-average fees on equity mutual funds hoping to earn above-average returns, then you are likely to lose money over the long term. In other words, invest in equity mutual funds where the Total Expense Ratio (TER) is below the average.
3. Buying for the sake of it
Deep inside, we wish to do the best with our investments. This is usually harmful. It makes people buy complex and dangerous products. Buy simple investment products and put your investments on autopilot.
4. Buy what you want not what you need
So how do you determine if it is a want or a need? One test is to ask yourself what it will help you to achieve. The more we focus on what we don’t have, the more deprived we feel. After all, inherent in the meaning of “wanting” is not having, and you cannot feel fulfilled while you focus on what you lack. That is a basic principle of spiritual study, especially Buddhism. If you want to be happy, be grateful for what you have. Focus on that.
The fulfillment of our needs, not our wants, is what makes us happy. Thus we would do better to focus on how much is enough to fulfill our various needs, and strive for balance in our lives. Distributing efforts across domains is wiser than being plugged into one area too much of the time. Beyond meeting our level of need, the extra effort in that direction tends to become excessive, distracting, and even stressful.
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