Victory! (2012) by Gerry James

Monday, March 5, 2012

Investing—Avoid “Get-Rich-Quick Investments” and Hasty Decisions

In my experience, the following are the common elements of a “get-rich-quick investment.”

 

1.      There is a promise of an abnormally high rate of return. If the expected rate of return is unusually high, then the risk associated with that investment is also unusually high. Hence there is a risk of very significant losses. If it sounds too good to be true, then it probably is.

2.      Generally, the investor has limited understanding of the investment. It is easier for a salesperson to sell you a high-risk investment when it is outside of your expertise.

3.      It usually requires a quick decision that will prevent the potential investor from obtaining independent counsel from someone who has a thorough understanding of the investment.

4.