How to read the fine print before buying a financial product

It is not an uncommon situation where we feel cheated by the fine print in many of our purchases. This is quite common in the case of purchase of financial products given the rampant misspelling of such products. There are just two rules which one needs to religiously follow to avoid situations of feeling cheated on buying the financial product. These rules work well for not only financial products but also for all type of products.


The rules are read the documents thoroughly before you sign on the dotted line. The techniques to reading the documents better are

1. Read backwards: Start reading from the end of the document. This is where a lot of things are hidden.
2. Read the notes: Anything which has a an asterisk needs to be given additional attention. 

These rules have been take from the pointers given in the Intelligent Investor - Benjamin Graham on how to read accounting statements better

Read backwards. When you research a company’s financial reports, start reading on the last page and slowly work your way toward the front. Anything that the company doesn’t want you to find is buried in the back—which is precisely why you should look there first.
Read the notes. Never buy a stock without reading the footnotes to the financial statements in the annual report.  In the other footnotes, watch for disclosures about debt, stock options, loans to customers, reserves against losses, and other “risk factors” that can take a big chomp out of earnings. Among the things that should make your antennae twitch are technical terms like “capitalized,” “deferred,” and “restructuring”—and plain-English words signaling that the company has altered its accounting practices, like “began,” “change,” and “however.” None of those words mean you should not buy the stock, but all mean that you need to investigate further.

These techniques are common sense techniques which are helpful when buying any kind of product