The trouble with taking charge of your own finances is the risk of falling for some kind of scam. Learning how to beat the vast majority of professional investors is easy: invest in index funds. But some people make the mistake of branching off to experiment with alternative investments.
Achieving success with a new financial strategy can be one of the worst things to happen. If something works out over a one-, three- or five-year period, there's going to be a temptation to do it again, to take another risk. But it's important to control the seductive temptation of seemingly easy money. There's a world of hurt out there and rascals keen to separate you from your hard-earned savings. In this chapter, I'll examine some of the seductive strategies used by marketers out for a quick buck. With luck, you'll avoid them.
Perhaps I'm justifying this to feel better about myself, but this is what I believe: Any investor who doesn't have a story relating to a really dumb investment decision is probably a liar. So I'm going to roll up my sleeves and tell you about the dumbest investment decision I ever made. It might prevent you from making a similar, silly mistake.
The dumbest investment I ever made
In 1998, a friend of mine asked me if I would be interested in investing in a company called Insta-Cash Loans. “They pay 54 percent annually in interest,” he whispered. “And I know a few guys who are already invested and collecting interest payments.”