Words that appeal to unsophisticated investors:
Leverage
Tax deduction
Passive income
Each of these things is real, but they’re rarely explained.
Leverage
Tax deduction
Passive income
Each of these things is real, but they’re rarely explained.
LEVERAGE:
What they say: “You can make a ton of money by leveraging. Put down 2% and 10x your money!”
What they don’t say: Leverage works on the way up...and is equally explosive on the way down.
What they say: “You can make a ton of money by leveraging. Put down 2% and 10x your money!”
What they don’t say: Leverage works on the way up...and is equally explosive on the way down.
TAX DEDUCTION:
What they say: “Do it for the tax deduction!”
What they don’t say: Do you itemize? Are you aware of the new laws limiting tax deductions? Why spend a dollar to save a dime? Have you actually calculated what this means for your financial situation?
What they say: “Do it for the tax deduction!”
What they don’t say: Do you itemize? Are you aware of the new laws limiting tax deductions? Why spend a dollar to save a dime? Have you actually calculated what this means for your financial situation?
PASSIVE INCOME:
What they say: “Free money while you sleep”
What they don’t say: Passive income is very real, but it requires a lot of up front work, and it also requires maintenance. This means customer research, copywriting, SEO, and on and on.
What they say: “Free money while you sleep”
What they don’t say: Passive income is very real, but it requires a lot of up front work, and it also requires maintenance. This means customer research, copywriting, SEO, and on and on.
IN THE END:
These mystical-sounding phrases are designed to appeal to unsophisticated investors to give them a magic bullet. The reality — that successful investing is primarily low-cost, long-term index investing — is not as sexy as "LEVERAGE"
Sorry to crush dreams
These mystical-sounding phrases are designed to appeal to unsophisticated investors to give them a magic bullet. The reality — that successful investing is primarily low-cost, long-term index investing — is not as sexy as "LEVERAGE"
Sorry to crush dreams
