I get this sort of question often:
“A friend introduced me to a very nice Christian man who is recommending I put my money into some kind of annuity or bonds or something like that. I’m not a stock market person. I don’t understand finances, but I really like this young man. He seems so honest. Does this sound like a good deal?”
My stock answer is, “No.”
Not because I know this is a questionable deal, but because I haven’t heard enough.
When evaluating offers (financial or otherwise), there are always two pertinent factors to study: the proposal and the person.
I hope this young man is exactly what he seems. However, I also know what victims often say right after being fleeced: “Oh, but he seemed like such a nice, Christian man!”
Classic logicians call this an “inverse ad hominem argument.” You rely too much on your evaluation of the person, and not enough on your evaluation of the person’s proposal.
Again, I am not saying this young man is a con artist. I’m urging you to look deeper.
The failure to investigate is how bad deals get consummated every day. A bad idea is easy to hide inside a Trojan horse of charm and smooth talk.
So how does all of this apply to you?
When you are evaluating any idea or proposal, financial or otherwise, I suggest balancing two parts of the value equation: character and content.
First, evaluate the other person’s character. You like him. Great. Now, go ask others who have dealt with him over a long period of time what their experiences have been.
Check references. Don’t simply settle for murky promises from a winsome personality.
Second, consider the content of the offer. What exactly is this person proposing you do?
In the example above, both bonds and annuities were mentioned. Those are very different instruments. Did the person really recommend both? Or is there a chance you misunderstood?
You need to make sure you understand the content of the proposal. Here’s a good test: Can you explain the offer to a friend or family member in such a way that they understand the broad outlines of the proposal?
Until it’s clear to you, it should be a “no go.”
By focusing on the person (but not the proposal), you leave yourself open to a scam. And by focusing solely on the proposal, you may end up with a great plan/idea that is being overseen by someone who’s incompetent (or dishonest).
Character and content—both are important. Don’t leave out either in your decision process.
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