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If it sounds too good to be true, then it probably is
We all want to believe in easy answers. The idea that there's some secret door nearby though which we can walk through and solve all our problems is a seductive one. Nowhere is this more dangerous than in the game of money.
Let's face it, dealing with our financial situation is a drag. You have to work forty hours or more a week just to keep a roof over your head and food on the table. The bills never stop coming in - tax, phone, credit card, utilities. And then, of course, there's all those wonderful new consumer goods pulling on your mind and your wallet.
If you said to people: "What can I do to make you more happy?", many would answer: "Give me more money".
So the promise of easy money is always a seductive one. If you think that all you have to do is something clever, without a lot of work being involved, and the cash will come flowing in - well what could be cooler than that?
Unfortunately, there's a large number of people out there who know this basic human weakness for easy money, and aim to take advantage of it. They promise big rewards with little risk. They put advertisements in the newspaper, infomercials on TV, or even recruit people at the local bar.
"We know the secret of making lots of money fast with no risk," they claim. "All you have to do is trust us".
Some are sleazy and obvious con-men. Others dress themselves up as stable and conservative financial institutions. But whatever image they try to project, the message is always the same - fast money, low risk.
If you hear someone making such claims, no matter how reputable or smart they appear, alarm bells should immediately go off in your head. Despite the hopes of many people, risk and reward are strongly connected in any type of investment. The higher the reward, the higher the risk. This law holds true whether you're talking about bonds, shares, property, or one of the more exotic financial products.
High reward with low risk is simply too good to be true. And if that's how it sounds, then that's probably how it is.
Even if you find yourself being convinced by the easy, riskless money one of these hucksters is promising, ask yourself one simple question. If this person was really smart enough to find a way of making tons of money with little risk, what does he need me for? Why sell me his financial product when he could simply use his system to enrich himself and not tell anyone about it?
If it sounds to good to be true, then it probably is. If you're going to invest, do it conservatively. Don't believe the stories of easy riches, or you'll find yourself soon separated from your hard-won money.
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