7 Things You Should Know Before Getting Any Financial Instruments

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In my course of work as a financial consultant, I meet literally hundreds and hundreds of people out there with different types of personalities, different types of attitudes and different types of attributes when it comes to the topic of managing money.

There are really lots of financial instruments out there that you can use to accumulate your money, be it for your child’s education, for your retirement, to improve your living standards or even for your obligatory Haj in Mecca in the upcoming future.

In this article, I will like to share with you 7 things you MUST know before making decisions to get the financial instruments.

1) Know How Long You Need To Keep The Financial Instrument

I have met clients complaining to me that they have been shortchanged by their agents.

They claim this and that, often vouching on the topic of losing money.

Often, it is a regular premium endowment.

When I questioned them, on how long they keep and then liquidate their plan.

They will answer 1 or 2 years.

It doesn’t take a genius to figure out that by liquidating with that short period of time, the amount that they will get will definitely be lower than the principal amount.

So first thing first, know how long you need to keep the financial instrument.

2) Know What Are The Charges Involved

It is normal that in everything you do, there will be charges involved.

As an informed consumer, you must know what are the charges involved and how long it will take for your investment to break-even with the charges.

3) Objective Of YOU Getting A Financial Instrument

You must know your objective of getting a financial instrument.

What is your purpose of getting that life insurance policy?

What is your purpose of getting the savings plan?

You must have a purpose, if not you will be doomed.

If you get an insurance policy without a purpose, you will soon lapse it.

If you get a savings plan without a purpose, you will soon liquidate it and spend all the money away because you don’t feel a need for you to save that money.

You don’t have an objective!

So, remember this, anything you do, you must have an objective.

4) Know the background of your advisor

Ask your advisor if he is practicing what he preached.

If he is recommending you a financial instrument, asked him if he, himself have used the financial instruments he recommends.

If not, ask for the reason.

5) Get the financial instruments only if you understand

Yes. That is a statement.

Only get a financial instrument, if you truly understand it.

You will not want to subject yourself to ambiguity and a confusing lifestyle in the future.

Clear your doubts before getting any financial instruments.

6) Ensure that you can afford

When you get a life insurance policy, a savings plan or an investment plan, do ensure that you can afford to do so.

It is not smart to get something you cant afford.

Make sure your financial associate assess your financial situation and recommends strategies that you can use to accommodate that financial instrument in your existing lifestyle.

7) Check if there are back end charges

Some plan don’t have upfront charges, which makes the plan looks impressive.

Ask your adviser if there are any back-end charges to your policy.

You won’t want to feel happy and end up being disappointed when you liquidate your financial instrument.

I hope these 7 points will be beneficial to you !

Written by:
Helmi Hakim
[email protected]

If you would like to join us as a writer or have enquiries on Thalatha Scoop, send your questions or articles to [email protected]

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