Day 1 of Detective School
During the first day of detective training school, recruits are usually taught the ABC.
Nope – this isn’t the alphabet.
It’s a new way of thinking from that moment on in our Policing career: the ABC detective mindset.
“Assume nothing. Believe nobody. Confirm everything.”
A variation of this is:
“Accept nothing. Believe nobody. Challenge everything.”
I want to show you how to apply the concept of an ABC detective’s mindset to protect your money.
Why is a Detective’s Mindset so Important?
Hopefully it doesn’t come as a surprise to you that people lie. Criminals lie. Even well-meaning members of the public can unintentionally provide inaccurate information due to their eagerness to please and help.
This is why it is important that Police Officers, especially detectives, corroborate, confirm and clarify every piece of information that we are given.
In fact, we a duty-bound and required by law under the Code of Practice to the Criminal Procedure and Investigations Act 1996 (CPIA) to be impartial and thorough:
“In conducting an investigation, the investigator should pursue all reasonable lines of inquiry, whether these point towards or away from the suspect.” – CPIA
When investigating a complex crime, the number of enquiries can be overwhelming. Applying the ABC mindset reduces the chances of detectives being led astray on what could be a wild goose chase, or worse a miscarriage of justice.
This way of thinking can be applied to your money as well.
It’s a blogging mine field out there
Depending on the statistic, one of them say there are 500 million blogs out there. It’s safe to say even if a tiny fraction of them were money or personal finance related, it would still amount to loads.
Blogging literally has zero barriers to entry. Anyone can start a blog for free and begin writing or selling.
Not all blogs are out to make money.
Of those who do, not all will try to promote something which is cr*p or sell you a course that will be money down the drain.
But some do.
A course to improve your SEO, to make money in real estate, to make money in bitcoin, to be financially independent…even a course on how to build a course.
Applying the ABC detective’s mindset: ask yourself these questions before you buy a course or click on an affiliate link:
- Has the author been open and transparent about the affiliation?
(If not, then can they be trusted?) - Have I done my own research in the product or company?
(Tip: go through page 10+ of Google search results. You need to look harder to find honest reviews – companies can and do pay for good reviews that rank well in Google) - Have I asked around amongst my peers to see if they have first-hand knowledge of the company or product?
(Nothing beats a personal recommendation – but be careful! Make sure they weren’t fooled themselves.) - Is what’s being offered already available for free?
(There are so many free resources out there. Are you sure what you’re looking for doesn’t need to be paid for?) - If I can get what’s on offer for free already; is it worth paying to receive this information or product from this specific individual? If so, why?
(Sometimes, despite what’s being offered could be had for free; the time and effort to look for it, quality assure and piece it altogether just makes it more worthwhile to pay someone to do the leg-work Also, you might like how this individual writes or presents.) - Is what’s being offered good, trustworthy and credible?
(Relates to point 2)
I am not saying that all bloggers who have something to pitch or sell are not being truthful or that you would waste your money. Just do your due diligence, know exactly what it is you’re paying for and why.
Quick money, New money, Easy money
There will always be money making fads. Schemes, products or courses that promise a path to get rich quick.
They were around even before the internet. However, the age of the internet has meant that information (or mis-information) is more easily accessible, spread quicker and wider.
Every so often, something goes viral and everyone want’s a piece of it.
Fear of missing out (FOMO) kicks in big time!
It is when the urge to follow the crowd is at its strongest that the ABC detective’s mindset is needed the most.
Approach with caution.
I know of people who jumped on the crypto-currency bandwagon. I’m not saying they are scams or poor ‘investment’ decisions. I am no expert in crypto-currency or blockchain technology so I make no comment either way.
What I am questioning is the mindset of the individuals when they decided to part way with their cash.
Here are things I would ask myself:
- How much do I understand the technology and what do I believe I am really ‘investing’ in?
- Am I ‘investing’, ‘speculating’ or just simply ‘gambling’?
- Can I afford to lose the money?
- How much of my net-worth will I put into this?
- What is my investment goal?
- What is my risk tolerance?
- When will I need the money back?
- When and why will I sell the investment?
- Have I discussed this with my partner?
- Have I listed the reasons why I should NOT invest in this?
The last point is important. It is you challenging yourself and your own decision making process. If you’re not able to list a single reason why you shouldn’t invest; then I would suggest you might need to think harder or get someone close to you to challenge your thinking. Maybe even go through the Police National Decision Model to really make sure you think this through properly.
Here’s what Investopedia has to say about Investing vs. Speculating vs. Gambling:
Investing
“Whenever a person spends money with the expectation that the endeavour will return a profit, they are investing. In this scenario, the undertaking bases the decision on a reasonable judgment made after a thorough investigation of the soundness that the endeavour has a good probability of success.” – Investopedia
Speculating
“The act of putting money into financial endeavours with a high probability of failure. Speculating seeks abnormally high returns from bets that can go one way or the other…speculators try to make an educated decision on the direction of their trades. However, the inherent speculative risk involved in the transaction tends to be significantly above average.” – Investopedia
Gambling
“Gambling involves a game of chance. Generally, the odds are stacked against gamblers. When gambling, the probability of losing an investment is usually higher than the probability of winning more than the investment…always involves a negative expected return – the house always has the advantage.” – Investopedia
Everyday life
This way of thinking could also be applied to everyday life. How you interact with a sales person when you buy a house or a car for example. If the real estate agent says:
“This is an up and coming area.”
Ask them how they know this? What is the source of the information which allowed them to reach such a conclusion? Go and check town planning records, historic and recent sale prices, public crime data, census data, recent news reports for that area, speak to the neighbours and so on.
“Assume nothing. Believe nobody. Confirm everything.”
If the car sales person says:
“This car will give you trouble-free miles.”
Ask them how they know this? Do they own one themselves? What’s the warranty on it? Can you read the terms of the warranty? Check reviews online. Has there been any recalls? What’s the safety rating on the vehicle? Has it been in an accident and so on. Again:
“Assume nothing. Believe nobody. Confirm everything.”
Final thoughts
It might feel like a very pessimistic way to live life. I am not suggesting you do this with everyone you interact with, friends, family, your partner! You’ll end up living life in paranoia.
Coppers tend to be sceptical in their nature. The truth is, being in the Police for so long has given me a more negative view of the world and distrustful of people in general. However, I am fully aware that my work has created this bias; something I have to consciously counter-balance.
Having said that, there is no denying that it has helped me protect my family’s financial future by being more careful with what we invest our money in. Maybe you could apply this sceptical mindset to any investment or large purchase decision you make. It might give you a better chance of protecting the money you’ve worked so hard for.
You too can be a Cashflow Cop!
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Humans of FI
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Very wise words! I’m constantly tempted to throw some more money into the latest p2p scheme, but I keep reminding myself that it’s not worth the risk, and that I should stick to what’s tried and tested; in my case, stocks and shares!
I have a few friends who bought some Bitcoin about two years ago. They were obviously pretty pleased as it approached $10K, and then $20K, but maybe not when it crashed just a few days later! Luckily they didn’t use a significant amount of money, but still, even losing a few grand can be painful. I know Bitcoin is on it’s way back up at the moment, but I don’t know if they still own any.
I was very close to mentioning P2P but didn’t want it becoming a debate and detracting from the message of the post.
Like you, I like things that has been around a while. Similar to how I don’t buy cars where it is a brand new model from a manufacturer; or a new-build home; or anything that has the term “new technology”. There tend to be issues and teething problems which do not get addressed until years down the line.
The people we know who have crypto might end up laughing at us in the future. However, I am happy with my steady and pretty much guaranteed approach over a quicker route that has a higher probability of failure.
Setting aside a bit of “fun” money is different though.