Page 32 - Masala Lite Issue 167 November 2024

32 CASH COURSE WITH ATUL FORCE YOURSELF TO KEEP IT SIMPLE

One of the most effective strategies for making better financial decisions
is to only do things that you can explain to a five-year-old. Having this

SET SOME approach encourages understanding and ensures that you
can grasp the fundamentals of what you are investing in.
If you are unable to simplify the concept, the investment
RULES THAT may be too complex or risky. This will not only help you
make informed decisions, it will also reduce the power
WILL PAY HUGE of hype or fanciful jargon that you encounter. Does this
mean that you will have to pass on exotic opportunities
that can earn you 10x your money? Perhaps. Those
DIVIDENDS same exotic investments are the ones that can also
go down to zero.
MAKE YOUR OWN RULES (DO NOT OUTSOURCE THEM TO BANKS)
Let us consider the example of taking out a mortgage, although this can apply to other
situations as well. If you apply for a mortgage, the bank will approve a certain limit based on
your income. Do not use this as the amount that you should be spending on your mortgage.

The bank knows nothing about your lifestyle, future expenses and financial goals. Do
your own budgeting work and arrive at an amount that makes sense for you. Better yet,
A BRIEF SUMMARY: if you can make a purchase considerably lower than what the bank will approve for you,
that is money saved!
• Creating some rules to govern your financial life will serve you well. It does not

matter what stage of life you are in. HAVE A PLAN FOR SIGNIFICANT MARKET MOVES
• Can you explain what you are buying to a five-year-old? One rule I like to use If you have investments in assets that can go

is to not buy anything you do not understand and can’t explain to a child. up and down in price, having a plan for extreme
environments will serve you well. Financial markets
• Sometimes, third parties will try to make rules for you. Banks will approve you are unpredictable, and can change at a moment’s
for a certain amount you can afford on a mortgage. Do your own maths.

notice. Having a plan in place beforehand can help
• You may have had or will have uncomfortable encounters with salespeople. you greatly. When security prices plummet, there
Tell them you never give a, “yes” answer on the spot to take the pressure off. are sometimes great deals on offer. If you can take

advantage of these situations, figure out how you’ll

do so before the mayhem hits.
RULES WILL HELP YOU IN THE LONG RUN NEVER GIVE ANSWERS ON THE SPOT TO
Establishing some rules and boundaries for your financial and investing life will pay off SALESPEOPLE

greatly. Having some guidelines helps to create a framework that has many benefits. Having a rule to avoid giving commitments to

Approaching decision making in a disciplined manner can mitigate the emotional salespeople will only benefit you. High pressure
rollercoaster that can happen when something unexpected takes place. tactics can cloud your judgment and may lead
This can be something as simple as setting a rule to save a part of your pay check. to decisions that do not align with your goals.
Having a rule in place will make it more likely that you will maintain consistency and Salespeople often ask for feedback in lieu of an
achieve your long-term goals. Here are some examples of simple rules that you can answer from you. This is often used by them to sell
consider implementing as they are relevant to you: more, and harder. If you do not wish to engage in
dialogue, just tell them that you need time to think
and review before giving more information.

MASAL A LITE ISSUE 167 - NOVEMBER 2024