By Leroy Ferrao
I am going to unravel the 5 dangers with the word starting with M. These M’s could pose a huge threat to your financial life. However, if you want to avert a bigger crisis than the COVID-19 pandemic, please take immediate action by deleting these 5 M’s in your life permanently.
#1.Crashproof yourself from MLM
The trap
MLM or Multilevel marketing is a business, which requires that you get paid to bring people under you, to sell a product or service. It is a pyramid scheme and someone is getting richer from your hard work. MLM companies make a lot of money for their owners, and they are willing to spend fortunes to keep the pyramid scheme working. The top 5 companies have made over 20 billion dollars in revenue each year at the expense of the naive, who give their time, money and energy to these companies.
The Exploitation
These so-called direct selling companies disguise their operations by selling products when in reality, it is their salespeople who buy the products and create a pyramid scheme. The scheme is designed to increase members under you to keep their businesses moving on. You only earn a commission after buying the product whereas a sales employee will get a salary and a percentage of the sale without buying the products.
The new form of MLM
Stay away, as many of them are being promoted as network marketing businesses today. They often use their top performers to bait the ignorant. Avoid becoming a distributor of any company. I encourage you to sell your products or services to navigate safely in these turbulent times. Delete the first M in your life and crashproof your financial life.
#2.Crashproof yourself from mutual funds
“Professionals in other fields, like dentists, bring a lot to the layman, but people get nothing for their money from professional money managers.”- Warren Buffett
The discerning investor
Why will you pay annual fees ranging from 1% to 3% to the Mutual Funds industry to invest your hard-earned money in the stock market? For example, if your investment’s market value drops by nearly half due to the crisis, why would you want to bear the risk, the loss and, besides, give your fund managers their fees for your disaster? Now the mutual fund industry may counter this view by stating that in the past it has also given huge returns. However, it was true only for some funds and not all.
The risk you pay money
The best recommendation by experts was investing in the index funds. However, that was during the pre-COVID world. Today, the stock market is sinking and consequently the entire mutual fund industry. Why would you want to remain invested in this falling industry? The rich invest in the stock market because they can bear the risk of losing their investment. It will not impact their lives even if their entire investment gets wiped out. The question is, can you do the same? Why would you want to commit financial suicide? Why would you pay to invest your hard-earned money? That’s my biggest concern. Why do you want to take the risk of losing your principal amount invested?
The alternative
If you invest in RBI Bonds or the fixed deposits of the Indian Post Office, your investment is guaranteed by the government. It is better to earn less and be safe than risk your investment earning more and lose it in these stormy times. Lastly, why invest in another person’s business when you don’t have any control over the investment? Delete the second M in your life and crashproof your financial life in this pandemic. Think over it. It can be the difference between winning or losing.
#3.Crashproof yourself from the media
Media is controlled by powerful organizations or media moguls, government, advertisers, journalists, and money. Moreover, news thrives on negativity. Is it wise then to start your day with the news? Why concern yourself with what is happening in the world? Why not focus your energy on your life?
The second side of the coin
Well, it is good to remain updated with the news. You can watch or read the news in your spare time or keep it for the last thing of the day. Thus you will get at least one perspective on a matter i.e. the negative. It is better to check the headlines online than read the entire content. Moreover, learn to filter information, question it, and verify its sources, before you accept it.
Pitfalls about social media
Exercise caution while using social media. Are you using it for education or entertainment? Whom are you interacting with? Do you know that you are the average of 5 people whom you are closely associating with? One expert said, ” Show me your friends and I will show you your future”. Delete the 3rd M in your life and crashproof your time and mind from the COVID-19 news available on the mainstream media.
#4. Crashproof yourself against moratoriums
Experts view on the moratorium
The Financial Institutions announced a moratorium on loans for a period of 6 months after the lockdown was imposed. Now, they want to extend it for 2 years. However, there is a catch, you will have to pay interest during the period on the balance of the loans. How can you deal with it? Experts suggest that if you have lost your job or cash flow during the lockdown period and you cannot pay your EMI installments, it is better to opt for it. However, this is not my viewpoint.
Could you go for it?
Why will you remain in debt during the COVID-19 pandemic for more than 2 years and sink financially to keep the financial institutions afloat by paying interest? Why don’t you sell off any asset that you own, pay off your liabilities, and become debt-free? You can also buy anything in the future when your cash flows are strong at a cheaper price. If you have built reserves you can buy cash down. My strong recommendation for you to crashproof yourself against moratoriums is to close your loan account and come out of the debt trap laid by these institutions.
#5.Crashproof yourself against marketing
Marketing is employed to empty money from your reserves. These days it’s the age of digital marketing. How will you crashproof yourself from these effective weapons designed to empty your purses?
Determining wants and needs
Firstly, ask yourself this question. Is it a want or a need? If it is a need, have I done my research to find out the best options in the market? Can I delay the buying decision for at least a month to find out whether I still consider it essential? Have I spoken to others and sought their opinions? Is it an asset that will put money in my pocket or an asset that will lose value in the future? For instance, buying a laptop with an internet connection will help you start an online business and put money in your pockets thus creating value for you. Moreover, buying depreciating assets like garments, etc. will lose value in the long run and become garbage.
Buy Value not cost
Only buy if the value is greater than the price even if it is expensive. For example, buying organic food is expensive but its value is priceless as it promotes health. However, buying cheap footwear may serve you few months, and then you will have to repurchase it taking money out of your reserves.
Learn to handle marketeers
Secondly, never make a quick decision to buy. Think twice before you leap. If a telephone marketer calls you on your phone, do not receive it. You may need to install an ID caller application on your phone. As a matter of precaution, do not take unknown number phone calls. It could be cyber thieves, fraudsters, gangsters, stalkers,etc. Block the unknown numbers immediately for security reasons. Never strike deals on the phone without due diligence. You can always reply to a marketeer that you will get back to them and buy time to investigate the best deal.
Avoid Telemarketing
Thirdly, big companies like Amazon, Google, etc. do not engage in telemarketing. Customers go to these companies’ websites or stores to buy things. If a company is using telemarketing, a red flag should come up in your head.
Lastly, save your money from discretionary spending and purchases as now is the time to build reserves as this pandemic is going to last a long time even if vaccines are developed.
Conclusion
The world has designed magnets to pull your money out from your bank account and that’s why you and I need to get smarter to handle our hard-earned money. The 5 M’s are some of the magnets employed to deplete your reserves. Identify these camouflages set in the system and take your precautions and you will be able to navigate the troubled waters safely.
What are your takeaways from this post? Are there more M’s you have discovered that others need to be safe from?
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