Only Two Guarantees in Life

We live in an amazing time.

Despite the erosion of faith in our institutions there is an abundance of opportunity.

Whatever your realm of desire - business, family, financial - the options to achieve your goal are virtually limitless.

But that doesn't stop some people from limiting their own success.

They are the naysayers who say things cannot be done or those who are critical of others who achieve success. This attitude is just human nature and some people are unwilling to see the world differently.

They are also particularly vulnerable to predatory behaviour of scammers.

The rationale behind that claim is that someone who sees the world through a permanent mist of negativity find themselves falling further and further behind. Despite the relentless criticism, they covet the success of others around them and eventually look for the quick fix to catch up.

Get rich quick schemes are usually scams but people fall for them all the time.

They work because people can be desperate or greedy or both.

Those two emotions often conquer any innate cautiousness as people rush to part with their money.

I had one such example displayed to me recently. A reader contacted me several times asking me to promote a 'bitcoin mining' venture to the Confidential community.

You didn't hear about it for a couple of reasons.

Firstly, our community doesn't work like that. Secondly, it was crystal clear that this 'business' opportunity was a scam.

I told the correspondent exactly what I thought.

Then yesterday, a relative of the same guy contacted me claiming they lost $175,000 as the 'guaranteed returns' simply disappeared along with their money.

That made me think how on earth does someone part with that sort of money without doing some serious due diligence on what they are investing in?

Even asking the most basic questions will often reveal the truth.

A few years back, some friends got into buying ATMs and were hooked by the 'guaranteed' 20 per cent annual returns. They too tried to get me on board. I simply asked who was guaranteeing the returns and why the vendor didn't borrow money from the bank (at 5%) instead of paying investors quadruple that rate.

It turns out the $2 shelf company 'guarantor' was as credible as a Nigerian Prince wanting to send you millions via email. My investor friends lost a lot of money and some still have a few ATMs in their garages!

It's a salutary lesson for all of us.

Given the right circumstances anyone can be scammed. They are most vulnerable during booms and busts as the emotions of greed and desperation kick in.

I mention this today because it's likely we'll all be subject to the environment fuelling those dispositions sometime soon.

If our economy tanks, financial pressures will make people desperate for a solution. If we go on a massive inflation led asset price boom, those missing out on will feel themselves slipping further and further behind and hungry for a slice of the action.

That's when they are most vulnerable.

Unlike life where death and taxes are both guaranteed, there is no such thing as a free lunch when it comes to investing your money.