Double your money – the surefire way

Admit it – did you start reading this article because you thought it would show you how to make your fortune?

Who hasn’t been tempted by the thought of being part of the next biggest, greatest financial thing – the opportunity to effortlessly and speedily double, triple or quadruple your money overnight? And yet, unfortunately, everyone is familiar with someone who has suffered the opposite result: those seemingly savvy and intelligent individuals who sadly ended up losing not only potential profit, but also their entire investment.  Victims of investment fraud!

So how does it happen?  Why do people continually fall victim to these scenarios?  Why have I seen too many cases of individuals who have lost large sums of money to sophisticated and non-sophisticated investment schemes? While no one reason can completely encapsulate the terribly rampant investment fraud that our world faces, there are a few basic reasons why we fall into the trap of trying to make easy money.

  1. The simple answer is that practically our whole culture is based on immediate results – whether it’s via the microwave or instant downloads, we want immediate, positive results.  When we find someone promising or guaranteeing us fantastic returns, we convince ourselves that maybe this might just be our train to riches, and thus allow our heart to lead our head in making bad investment decisions.
  2. International integration and our technical prowess has given us access to investments around the globe, with people and organizations that only a few decades ago would have been beyond our possible contact. But this shrinking investment landscape has also led to increased complexity in the investment world, whereby most private investors are unable to truly understand the risk and reward elements of their investments and instead rely on trust.  Trusting the salesperson, trusting your accountant, lawyer, family or community member to recommend a specific person or investment has replaced our necessary due diligence when selecting our investments.

But it’s time to change our perspective to ensure that we don’t fall prey where so many have fallen, because easy money is a fallacy.  Beyond lottery winners (who are few and far between statistically, and cannot be considered to be real ‘investors’) there are very few free lunches out there.  Making money, whether it’s through a business or via investments, is neither simple nor easy to achieve.

Let’s internalize the following rules, in order to remain grounded in reality.  While you may well have heard or thought about most all of them in the past, if everyone would live their lives accordingly when making investment decisions, few would have lost or be losing fortunes at this very moment.

  1.  Retain a high level of skepticism.  Cynicism and skepticism are welcome attributes when it comes to assessing financial offerings.  Don’t be too easily-convinced about the merits of an investment just because someone presents the facts as a given truth.
  2. Ensure financial transparency in all monetary dealings.  It should be very clear to all involved how everyone is making money, who is being compensated, by how much and when.  (The good news is that the Israeli system has a much higher level of transparency than the US system.)
  3. Don’t invest in anything you don’t understand.  If your financial advisor cannot clarify the situation sufficiently for you, either s/he or the package are not right for you.
  4. Complicated financial jargon is often used to hide something unpalatable – in the hope that the client won’t want to sound silly when s/he questions what is being said.  Don’t be afraid to sound stupid.  There’s nothing stupid about trying to protect your assets.
  5.  Be wary of affinity fraud.  Our natural tendency is to believe everything we hear from someone we trust, or go with whoever is recommended by someone we trust.  And if that person recommends an amazing tip or opportunity, why doubt them?  Affinity fraud is probably the most common fraud affecting the Jewish community as we rely greatly on our network of connections.  Skepticism should be applied to everyone and everything related to finances including one’s friends and their connections.  If they don’t like the questions being asked and get defensive, then turn around and walk.  Due diligence is standard and anyone who rejects these inquiries might just be hiding something unpalatable behind a cloak of secrecy.

Don’t get me wrong.  There are certainly ways to make your money work for you.  The skill is in ensuring that you are part of a legitimate investment that provides proper risk/return benefits that fit into your greater investment plan and your best interests.  If you can’t evaluate the merits of the investment independently, then seek guidance from independent financial professionals who can help you make the proper decisions.  And of course don’t forget common sense.  Sometimes if it sounds too good to be true, then probably it is …