One reason everyone has an opinion when it comes to personal finance is that a lot of things work.
At least to some extent.
It’s a lot like the fitness industry. Everyone is selling their unique program with different variations of sets, reps and exercises. And some are definitely more effective than others.
But they all rely on the same basic principles: Put in consistent effort over a long enough period of time, and you’re going to see positive results of some kind or another.
The same is true in finance: If you regularly save money and invest in assets that grow over time, you’re going to get positive returns.
That could be as boring as buying GICs or as risky as angel investing. It could be stocks or real estate, private equity or otherwise. There are many ways to turn money into more money.
Are they all equally risky? No.
Are they all equally effective? Not at all.
Do they all come with a different set of tradeoffs? You bet.
But when someone says, “Hey, look over here, I got this great method for getting good returns,” they’re typically not lying.
But they’re often:
* Understating the risks involved
* Overstating how good the returns will be
* Falsely implying that past performance is a guarantee of future results
* And almost always actively trying to draw your attention away from the opportunity cost, ie. what your next best alternative would be
The question that’s always worth asking: if someone really has a strategy to get returns way above the market, why do they need your money?