lukeplyr83
New member
I'm absolutely fascinated by the mechanism of scams. How people fall into them and why that particular person, at that particular time was susceptible to that particular scam.
One of the big contributors to falling into investment scams, is a lack of knowledge around what is a reasonable return on an investment. People hear that someone bought 1 Bitcoin for cheap and now it's worth $50k and think this is normal instead of a ridiculous outlier so I thought I'd show some numbers. This is based of a mixture of comments and posts on here over the last couple of weeks.
The S&P 500 is a good proxy for the stock market performance as a whole. Over the last 30 years the average return has been (roughly) 10%. If you took $1000, then after 1 year that would be $1100 total, after 2 years $1210 and so on. After 30 years you would have $17.5k (roughly). This ignores inflation and additional complexity to keep this easy. This in itself is a ridiculous return and anything promising more than this return needs to be looked at very carefully.
So to my point, I saw someone talking about a return of 60% in 3 months the other day so I did some quick maths...
After 1 year would be $4096, 2 years $26,843, 5 years $7,555,786. By 7.75 years you would be a billionaire. By 10.25 years you would be the richest person on planet earth. By 30 years the number had 9 commas and was so large I don't know what it is. I think it is octillions but I genuinely had to google that. I've never seen a number that large outside of a scientific calculator in physics class.
My point is, if someone genuinely could get these returns, why on earth would they tell you about it. They could make themselves the richest person who ever existed with just $1000 but they are selling you an investment of X dollars out of the goodness of their heart. The best thing you can do is stop and ask yourself, if someone genuinely has a strategy to beat the market, why would they not just do it themselves? Why tell anyone or sell anything? The answer is they must be getting more from that sale than their actual return.
One of the big contributors to falling into investment scams, is a lack of knowledge around what is a reasonable return on an investment. People hear that someone bought 1 Bitcoin for cheap and now it's worth $50k and think this is normal instead of a ridiculous outlier so I thought I'd show some numbers. This is based of a mixture of comments and posts on here over the last couple of weeks.
The S&P 500 is a good proxy for the stock market performance as a whole. Over the last 30 years the average return has been (roughly) 10%. If you took $1000, then after 1 year that would be $1100 total, after 2 years $1210 and so on. After 30 years you would have $17.5k (roughly). This ignores inflation and additional complexity to keep this easy. This in itself is a ridiculous return and anything promising more than this return needs to be looked at very carefully.
So to my point, I saw someone talking about a return of 60% in 3 months the other day so I did some quick maths...
After 1 year would be $4096, 2 years $26,843, 5 years $7,555,786. By 7.75 years you would be a billionaire. By 10.25 years you would be the richest person on planet earth. By 30 years the number had 9 commas and was so large I don't know what it is. I think it is octillions but I genuinely had to google that. I've never seen a number that large outside of a scientific calculator in physics class.
My point is, if someone genuinely could get these returns, why on earth would they tell you about it. They could make themselves the richest person who ever existed with just $1000 but they are selling you an investment of X dollars out of the goodness of their heart. The best thing you can do is stop and ask yourself, if someone genuinely has a strategy to beat the market, why would they not just do it themselves? Why tell anyone or sell anything? The answer is they must be getting more from that sale than their actual return.