Negotiating Your Investments Use Proven Negotiation Methods to Enrich Your Financial Life

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  • Format: Hardcover
  • Copyright: 2014-04-28
  • Publisher: Wiley
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A negotiation-based approach to investing and personal finance

Investing is best understood as a series of negotiations. The ability to conduct that bargaining with skill and confidence is worth a fortune. For example, if you overpay by two percent annually on an investment of one million dollars, assuming a return of seven percent per year, in thirty years it will have cost you more than four million dollars. With that much money at stake, you want to use tools that are recognized as world class. Negotiating Your Investments is about what you need to be smart and successful throughout the process. It is a guide to applying the science and principles of negotiation to your financial life. Most people don’t negotiate when investing, often thinking the process more like going to the doctor than working with a salesman. They fail to prepare, gather information, bargain, and gain commitment as they might in a recognized negotiation setting. Whether you are dealing with a true professional, a glorified salesman, or anything in between, this book will show you how to take charge of your most important financial deliberations. Author Steven G. Blum teaches readers the things they must understand going into such negotiations, methods for pursuing what they really need, ways to avoiding being taken advantage of, and techniques for getting others to fulfill their promises. He will guide you in recognizing and achieving best possible outcomes and putting dramatically more money into your pockets.

Table of Contents




Part I: What the Best Negotiators Do – The Ivy League Method of Negotiating

Chapter 1: What Is a Good Outcome?

Identify Truly Good Outcomes and Don’t Get Distracted

What Makes for a Good Outcome?

Chapter Summary

Chapter 2: Interests, Options and Goals

What Do You Really, Really Want?

Shared Interests

Dig Deep to Explore Underlying Interests

Don’t Settle for Win-Win


Structure the Deal to Meet Their Needs, Too

Work With Them to Create More Value

Chapter Summary

Chapter 3: Fairness

What is “Fair”?

Move Beyond “Market Value” to Measure Fairness

Chapter Summary

Chapter 4: Communication to Build the Kind of Relationship You Want

Set Relationship Goals

Choose Communication Tools Carefully

Work to Create the Atmosphere You Want

Focus on What You Want to Tell Them – And How

Use Active Listening Techniques

Be Aware of the Power Dynamics – And Consider Changing Them

Plan a Process That Will Lead to Good Outcomes

Chapter Summary

Chapter 5: Thinking about Commitments

How Tight Are The Bindings?

When Should We Be Bound?

Commitment is Not Just About the Ending – Consider It Throughout the Process

Many Little Agreement Steps

Chapter Summary

Chapter 6: Best Alternative: Where Your Power Comes From

Step 1 – An Inventory of Your Possible Alternatives

Step 2 – Identify Your BATNA

Step 3 – Strengthen Your BATNA

Step 4 – Estimate What the Other Side’s BATNA Might Be

Step 5 – Consider Whether You Can Weaken the Other Side’s BATNA

Work to Shape Their Perceptions

Be Careful Not To Rely Too Much on BATNA – Especially Where Relationships Are Important

Chapter Summary

Chapter 7: The Preparation Phase

Where Do We Hope to End Up?

Consider the Substantive Issues

Then Consider the Relationship Issues

You Want Good Substance and Good Relationships – But Don’t Trade One for the Other

Set High Achievable Goals

Who Are These People Who Will Soon Be Sitting Across from Us?

Chapter Summary

Chapter 8: Exchanging Information Phase

Ask Lots of Questions

Strengthen Your Bonds With the Other Parties

Gather Up All the Facts That They Are Comfortable Sharing

Managing the Danger That They May Lie to Us

Chapter Summary

Chapter 9: The Bargaining Phase

Work to Increase the Pie – And to Claim a Fair Slice

Use Conditional Language to Explore Trades That May Create Value

Propose Terms Favorable to You – But Defensible as Fair

Make Small Concessions Slowly and Deliberately – And Insist on Fairness

Be Resolute About Claiming Your Fair Share

Chapter Summary

Chapter 10: Closing and Commitment Phase

You Want Promises They are Sure to Keep

Create Scarcity to Enhance Their Enthusiasm for the Deal

Prepare to Be Patient

Chapter Summary

Chapter 11: The Problem with Agents

Sometimes Employing an Agent is Wise

Often Employing an Agent is Foolish

Are the Agent’s Interests the Same as Yours?

Chapter Summary

Part II: Applying Negotiating Skills to Investing

Chapter 12: Why Is Investing Really Just Another Type of Negotiation?

Investing is Similar to Other Big Ticket Negotiations

Do Not Be Fooled into Thinking It is Something Other Than a Negotiation

Chapter Summary

Chapter 13: What is a Good Outcome Regarding Your Investments?

Investment Goals are Narrower Than For Some Other Negotiations

Chapter Summary

Chapter 14: Applying the Negotiation Methods to Your Investing

Understanding Your Own Interests

Getting To Know Their Interests

Many Different Possible Options for How to Structure the Deal

Insist on Using Objective Standards of Fairness

Set Relationship Goals

Choose the Communication Tools That Are Best for You

Good Negotiating Process

Contributing to the Kind of Relationship We Want

When to Commit – And to What

Have a Strong Best Alternative

The Four Phases of the Investment Negotiation

Chapter Summary

Chapter 15: The Problem of Conflicts of Interest

Incentives Matter

Some Conflicts other than Money

Chapter Summary

Chapter 16: The Problem of Asymmetric Information

They Know Much More Than You Do About the Tricks of the Trade

Knowing More Creates Vast Opportunities to Take Advantage of Others

Chapter Summary

Chapter 17: Who Can You Trust? And Why?

Be Extremely Careful About Who You Trust – And How Much

You Can Work Well With People Without Trusting Them

You Can Trust Those Whose Best Interests Make Them Trustworthy

Chapter Summary

Chapter 18: Professionalism: Who is a True Professional and Why?

The Traditional Professions Struggle with Society’s Need for Trustworthy Help

The Traditional Professions Don’t Always Succeed – But They Must Always Try

Reclaiming Professionalism

Chapter Summary

Part III: The Economic Truths You Need to Know in Order to Be an Effective Investor-Negotiator

Chapter 19: Nobody Can Consistently Beat the Market

The Markets Are, For the Most Part, Rrational

Don’t Confuse Random Chance with Skill

Stock Research Offers Little Value

Chapter Summary

Chapter 20: Past Performance Does Not Guarantee Future Results

No One Can Predict the Future

Chapter Summary

Chapter 21: The Concept of Present Value

What is Tax Deferral Wworth?

Present Value and Life Insurance

Present Value and Money Back Guarantees

Present Value and Comparing Investments

Chapter Summary

Chapter 22: There is Really Only One Interest Rate

Higher Rates Reflect Higher Levels of Risk

Risky Investments Involve a Danger of Losing Much of Your Principal

Chapter Summary


Chapter 23: There Is No Such Thing as a “Free Lunch”… Except Diversification

Why You Want to Diversify

Chapter Summary

Chapter 24: Create a Highly Diversified Investment Portfolio

Be Honest With Yourself About Your Risk Tolerance

How to Achieve Diversification of an Investment Portfolio

Diversifying Asset Classes Beyond Stocks

The “Efficient Markets Theory”

Some Practical Aadvice on Choosing Specific Categories of Index Funds

Chapter Summary

Chapter 25: We Know What Has Happened in the Past

The Historical Average Return on Stock Investments is a Very Good Result

Seeking Higher Than Market Returns is Called Gambling

Chapter Summary

Chapter 26: Costs Are Important – They Reduce Your Returns

Higher Costs Result in Lower Returns

Many Investments Carry Expenses That Aare Just Too High to Be a Good Deal

Figure Out How Much You Are Paying to Those Who Lay Hands on Your Investments

How You Can Minimize Costs

Chapter Summary

Chapter 27: Investments to Avoid

Variable Annuities

Hedge Funds


Callable Bonds

Convertible Securities

Complex Partnership Deals

Chapter Summary

Chapter 28: How Much Is At Stake?

The Impact of the Fees You Pay for Advice

The Need for Action

Chapter Summary

Afterword: What is a Good Outcome in your Financial Life?

About the Author


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