I have come across many people who have been victims of misselling. I also fall into this category many years back when I was a novice to investing. I have come up with some simple rules which if followed will greatly reduce the chances of you becoming a victim to many of the financial predators out their who will always try to con you out of your money.
Understand the PRODUCT
Prior to investing anywhere, I always advise everyone to first understand the PRODUCT. Be it mutual funds, ULIPS, traditional endowment plans, shares, futures and options, post office Small Saving Schemes, one needs to understand how these products work. Spend as much time as possible in understanding the product. Do your home work, research on the internet and use any other source that is available to you.
Understand RETURNS and RISK
Once you have narrowed down on the product, evaluate the returns that can be expected from the product. Next understand the RISK associated with the product. Evaluate if your stomach can digest the risk associated with the investment product.
Understand the CHARGES and BENEFITS
Once you have decided on the product to invest, the next step is to evaluate the benefits and charges of the product. One needs to have the patience to read the product brochure to understand the benefits and charges. Evaluate if you are willing to pay the charges for the benefits provided. Not evaluating the charges is one major reason for discontent.
Not understanding either the product or the risk or the returns or the charges or a combination of all of the above is one major reason why one ends up buying the wrong product. Once they realize that they had bought the wrong product, they start to regret. Their emotions are heated, they get angry and upset. They start blaming their so called investment advisor (who is purely a salesman who is more interested in his commission than your interests). To avoid falling into this trap, every investor needs to do their home work.