There's No Such Thing
The pitch that sounded too good, and the detail that gave it away.
"If an investment is pitched as high return, low risk, that's a major red flag."
Meet Dave. He inherited $6 million when his father passed, and he did what most people in his position do: he looked at how the successful people around him were investing their own money.
After my father's passing, we went looking for investments for the money.
At that point we were already successful business people, in a mastermind with other successful people, and we relied on their investment advice. A few of them were telling us about their experience investing in done-for-you Amazon stores.
Skeptical, I asked around. One person even turned her laptop around right in front of me and scrolled through the deposits. I remember thinking, okay. Damn, this is legit.
The pitch was simple. We invest $34,000, they set up and run the Amazon store for us, and we split the profits. Soon we'd be making $10,000 per month, a phenomenal 350 percent annual return. Returns that high, with a perceived low risk and almost no work on our end, should have been the first red flag.
There were more. They were moving fast to get us to "invest." Are you in? We need to get going. If you don't do it this month, we won't have room for you. The price goes up. Each of those high-pressure tactics was its own red flag. But in the moment it didn't feel like pressure. It felt like exclusivity, a secret not everyone had access to.
I'll be honest about something else, too. It was inheritance money, and inheritance doesn't sting the way earned money does. It feels like house money. That made it easier to hand over.
We invested $34,000. The minute we did, they ghosted us. No store, no response. Years later we still haven't received a cent, and considering the person who sold us is now in litigation for doing the same to many others, we'll be lucky to ever see a dollar of it.
We fell into the trap I can now spot a mile away: the promise of high returns for nothing. Returns have to be paid for, and there are only two currencies: risk and work. Government bonds pay around 5 percent a year because you're bringing neither. Every return above that, somebody is paying in one or the other. The Amazon store promised 350 percent while charging us nothing. No risk, no work, just profits. That's not an investment. That's the red flag.
Up next · Lesson 04 Update the Game Plan The money plan you made before the money arrived may not survive it. Read next →