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USA Real Estate Blog

Avoid Scams, Build Wealth – Michael Tanner – Medium

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If something sounds too good to be true, then you have a great chance of making some serious money. To do this pause and think about the money you can save by avoiding a scam. And then think about how that money can grow and compound over the years.

Or if something sounds too good at least pause and ask WWASD?

WWASD = What Would a Scammer Do?

Please don’t become a scammer yourself. Just try to think about how they work so you can avoid them.

On a recent Saturday, I stumbled upon a radio program that was promoting stock trading software. The company’s name was not mentioned while I listened, just an 800 number. The show proceeded with two guys talking about how easy it is to trade stocks with this system and consistently make money. They admitted there are down days and there are up days. But the profitable days are a lot more common. Their software has green and red lights indicating when to buy and sell. It sounded too easy. And the optimism of making serious money with just a couple of hours a day was clearly emphasized.

I wish these guys were telling the truth. In all fairness, maybe they were. But most people who venture into active stock trading lose a lot of money. I have a few scars myself. And without diverging too much, the stock market is an incredible wealth builder; but primarily for those who invest longterm with well-balanced diversification.

The guys on the radio may know something I don’t. I think that’s fair to acknowledge. But if the program can genuinely sustain substantial profits, why on earth are they telling people about it? Are they paying for radio time out of pure altruism? Or why do they need additional sales from tools and education? Buyer beware when products are pitched that will steadily make anyone rich in a short time.

Scammers are Professional Persuaders

For the record, I don’t know who the guys on the radio are. And I’m not saying they’re scammers. I’m just saying I felt uneasy listening to them.

But let’s talk about people who are legit scam artists.

Real scammers are excellent persuaders. The good ones have deep intuition or training in human psychology. They understand what motivates people, and they know how to trigger powerful emotions. By focusing on fear and greed, a scammer can get someone to feel uneasy about what they don’t have; which then makes it easy for them to sell their solution.

Don’t Be Rushed

If you’re contemplating an opportunity and hear a small voice in your head say it might be a scam then stop for a moment. Take a deep breath. Remember, you have no reason to rush.

You’re in control of your choices.

Acknowledge your own emotions of greed and fear.

Examine what you’re committing to with the “opportunity.” Is it a large sum of your money? Or a significant investment of your time? What adverse details might be hiding in legal contracts?

Get an outside opinion from someone you trust. The larger your commitment, the more you’ll want to prevent future regrets.

And it can be eye-opening to examine conflicts of interest. These might be hard to know with certainty, but try putting yourself in the other person’s shoes. Or why not just ask?

Here’s an example told on a recent ChooseFI’s podcast with Robert Farrington. A commision-based financial planner bragged to his client about being at the top of his organization. In reality, he admitted to being excellent at sales. Yet he makes commissions regardless of his clients’ return on investments. Buyer beware.

You need to understand how the other person makes a profit. I absolutely think salespeople rightfully deserves to get paid. But understanding who’s side they’re on will better guide your decisions.

Again, don’t be rushed. Slow down and examine your emotions. Slow down to consider the big picture.

Non-Scams To Avoid

Books could be written about scams and fraudsters, but let’s keep this post focused.

There are plenty of things being sold that are in no way a scam, yet many of which are better left not purchased.

And what about Multi-Level Marketing products (aka MLM). A lot of people have built wealth with these programs. The problem is that for every person who amassed wealth it took countless others at lower levels to work hard with little profit.

Success in MLM requires convincing a few levels of minions that they can also be successful. (Should MLM stands for Minorities Leveraging Minions?) To be fair, not all MLMs are equal. Some do have great products. For years my mom bought Mary Kay because she loved the product. And yet I never heard her talk about wanting to go into the makeup business. No pie in the sky riches; she just liked the product.

If you find yourself interested in an MLM company just be mindful of your own biases. It’s tough to evaluate a product’s value while also learning about a “wealth system.” Most high-level MLMers are talented persuaders and can sell inferior products (or adequate products at higher prices).

If Scammed in The Past,
Learn and Move On.

Most of us have believed the lies of scammers at some point in time. No reason to feel embarrassed. Let the monies lost be remembered for the lessons they can continue to teach.

The promise of quick, easy money is a harsh robber of hard earned cash and future compound interest.

I sometimes wonder how much money I could have grown in my accounts by now if I had kept some long-gone dollars from crummy deals.

The potential compound interest of money lost to gimmicks hurts to think about. And yet trying to change the past is foolish and a waste of mental energy.

So let us be wise today and shrewd tomorrow. Let us keep our assets away from bad deals. And as possible, let us inspire others to be mindful of frauds so we may collectively force a few scammers to find other work.

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