Beware Of Get Rich Quick Scam
Everyone wants to be rich. Hey, abundance is good. When you live
abundantly, you will be satisfied, some say. That is why a lot
of people tout the next get-rich-quick scheme. And that is why
this business thrives. If everyone lives in abundance, who would
want to attend a $ 500 seminar promising you to be rich within
months?
What constitutes a get rich quick scam? For this, you need to
use your common sense. If someone can promise you a return on
investment of 20% monthly, is this scam? That depends. There are
some decent way of earning that kind of return occasionally both
in the stock market and in the real estate. Recent examples of
stock investing include investing in companies called Seagate
Technology (STX) or buying Korean based Webzen Inc. (WZEN). That
includes both pure luck and skill. Without the two, it is less
likely that you will achieve that kind of a return.
So now, if someone promise you that they can achieve that kind
of a return for the next fifteen years, is that scam? Whip out
your calculator and you find that one dollar compounded monthly
with 20 % return on investment, will wound up to be $ 179
trillion after fifteen years. This is seven times the entire
world's Gross Domestic Product (GDP). Simply said, you will own
the assets of everyone in this entire world and then some.
One of the best investors in the world is currently Warren E.
Buffett. Even then, he only achieves compounded annual return of
25 % a year. And yet, he is the second richest person behind
Bill Gates! I think this is the best gauge to measure investment
scam.
How about leverage? Leverage can increase your investment
return. Yes, it can. It also increases your risk. In the short
run, you can get more than 50 % monthly return even without
leverage. It happens a lot. Count yourself blessed. But, if you
expect to make that much money for the next fifteen years, you
are kidding yourself. The law of number will be against your odd
after a while.
What is the best defense against investment scams? Education is
foremost important. Furthermore, consulting with your friends
and relatives will be the next best thing to do. The need for
money is there and hence investment scam business can still
thrive. The next time you heard some wonderful business
opportunity, you should ask yourself if there is indeed a free
lunch in this world.