Get Rich Quick Schemes

Get Rich Quick Schemes – Can You Believe It?

A promise to make a person extremely wealthy over a short period of time,
often with little effort and no risk [I]

This is the Collins English Online Dictionary definition of a get rich quick scheme. Wouldn’t it be great if that were possible? But if you’ve been listening to what we’ve been saying for a while now, you will know that high returns come with high risk. So when a scheme sounds too good to be true, well, you know the rest.

The truth is, getting rich is the result of careful planning and long-term commitment. But it’s human nature to want to succeed, quickly and in spectacular style, especially when times are as tough as they are now. So let’s take a look at some of the more ‘popular’ get rich quick schemes, and why they just don’t work.

Real Estate

Let’s be clear, if you invest wisely, it is entirely likely you will make money on real estate. The thing to watch out for here is the speed at which you will make money. Real estate is a long-term investment because there are high entry and exit costs.

If interest rates suddenly rise to unaffordable rates, or your property is untenanted for an extended period, you could potentially lose money. You will also have to factor in CGT if you haven’t lost money.

The idea of ‘flipping’ properties is very appealing, and many get rich quick schemes suggest anyone can do it. But this requires a strong knowledge of property prices in the area, an understanding of what represents overcapitalisation on any given property, and the ability and time to effectively manage tradies, or do the work yourself.

Invest in property by all means, just do it as a strategic part of your overall financial portfolio and check out our recent article Investing in Property for some tips.

 Crypto

We’ve all witnessed the spectacular rise of crypto currencies and are now witnessing their jaw-dropping fall. Yes, it is possible to have bought and sold, at the right time. But that takes a great deal of luck.

And since crypto currencies are entirely unregulated, if you fall prey to unscrupulous traders, you have no recourse to regain lost funds. Side note, crypto is often used for nefarious activities like money laundering and illegal dark-web purchases. Not the type of people you want to entrust your hard-earned to.

Gambling

There is one truth about gambling. The house always wins. Whether that’s a bricks and mortar betting shop, online betting, a casino, or even lotto tickets, the chance of making it rich is extremely slim. Sure, you hear success stories. Just enough of them to keep you going back for more. But if you put that money into a solid investment, in a few years you’d be much better off.

Multi-Layer Marketing (MLM)

Way back in the 1920s Charles Ponzi (I’m sure you’ve heard of him) created the first known ‘pyramid scheme’. While these ‘Ponzi Schemes’ are now illegal, multi-layer marketing schemes are a legal evolution of this idea.

If a get rich quick scheme involves you paying up front for goods you will need to on-sell, or recruiting others to sell on your behalf, be warned. Especially if the scheme comes with statements like ‘earn six figures while working part time’ or ‘no prior knowledge required’. Yep, as we said, if it sounds too good…

How to Spot a Get Rich Quick Scheme

A few key things to look out for in spotting one of these schemes designed to part you from your money include:

• The ability to achieve through the scheme being a secret or known to only a few
• A sense of urgency
• Upfront payment
• Unrealistic claims – like no experience necessary or 100% success rate

So, back to our original question – can you believe it? Well, I’m guessing you already know the answer to that…

If you want to make the most from your investments without risking your shirt, Manly Financial Services have the expertise and experience to help you achieve your goals. Give us a call on (02) 9976 3388 or contact us via the below link.

Interested in knowing more?

References:
[i] https://www.collinsdictionary.com/dictionary/english/get-rich-quick-scheme