Welcome to the “2-Minute Money Manager,” a short video feature answering money questions submitted by readers and viewers.
Today’s question is about scams; specifically, why so many people seem to fall for rip-offs.
Watch the following video, and you’ll pick up some valuable info. Or, if you prefer, scroll down to read the full transcript and find out what I said.
You also can learn how to send in a question of your own below.
For more information, check out “10 Golden Rules to Avoid Getting Scammed” and “10 Types of People Who Fall for Scams, Schemes and Cons.” You can also go to the search at the top of this page, put in the words “rip-off” or “scam,” and find plenty of information on just about everything relating to this topic.
And if you need anything from a cellphone plan to a mortgage, be sure and visit our Solutions Center. That’s a place you won’t get ripped off.
Got a question of your own to ask? Scroll down past the transcript.
Don’t want to watch? Here’s what I said in the video
Hello, and welcome to your “2-Minute Money Manager.” I’m your host, Stacy Johnson, and this answer is brought to you by Money Talks News, serving up the best in personal finance news and advice since 1991.
Today’s question comes from Allison:
“Hi, Stacy! I recently started getting emails for stock newsletters. They promise the moon. Is there really an investment system that works?”
Allison, as long as there have been people on this earth too lazy or stupid to work, there have been people ripping other people off. As I speak, someone’s getting a call from some sleazebag in a boiler room. Someone else is paying big bucks to learn the “secrets” of stock trading. Or real estate investing. Or playing poker. Or creating a successful website.
Obviously, not everything is a rip-off. We sell courses that deliver what they promise and that we honestly believe are worth the price. Other reputable companies do as well. But too often, the purveyors of financial products are nothing more than modern versions of 19th-century medicine shows, promising everything and delivering nothing.
Why do people fall for scams when they should know better? Well, instead of telling you, let me show you.
Here’s a simple system you can use to rip off your fellow citizens; no experience, knowledge or common decency required.
Step 1: Find your victims
The first thing we need is a list of targets to pitch to. No problem: There are plenty of email lists for sale out there. Even better, advertise via Google or Facebook. These platforms have somehow persuaded so many people to voluntarily give away their personal information that targeting specific demographic groups is a snap.
This will cost a few bucks, but not to worry. You’ll make it back shortly.
Step 2: Pick 4 volatile stocks
Now, we need some stock picks. Ideally, we’d like stocks that are volatile; in other words, they move around a lot.
You could try doing a little research and try choosing decent companies. Or, just throw some darts. It really doesn’t matter.
Step 3: Write your pitch
Now, it’s time to write your sales pitch. It should go something like this:
Tired of working hard and making little?
Sick of earning squat at the bank?
Well, how would you like to make 50% on more on your savings with no risk? How about 100%?
Too good to be true, right?
Well, it isn’t.
I quit my day job a long time ago. Now, I’m retired and spend my time with my wife and kids.
How did I do it? Well, over the last decade or so, I perfected a stock-picking algorithm that makes so much money, so consistently, all I have to do is cash the checks that come in!
But don’t take my word for it. Let me prove it to you!
Over the next several weeks, I’m going to tell you exactly what stocks my algorithm tells me to buy. Don’t worry … I’m not going to charge you a penny.
Only after I’ve proven that my system works will I ask you to become a paid subscriber to my super-secret, super-special, super-stock-picking newsletter.
Stay tuned for my next email!
If you’re not good at writing rip-off copy, not to worry. There’s plenty out there you can steal and modify.
Step 4: Divide and mail
You’ve got four stock ideas. Divide your email list into four parts. Then, send one of your picks to folks in each of those parts. Explain that your super-secret, super-special, super-stock-picking algorithm said this one was going to be a winner.
Wait a week or two.
More than likely, at least one of your picks will go up. The lists of those receiving a winner will now be divided up into four groups. Get out your darts; you’ll be sending these four groups one of four new picks.
If a pick went down, cross those people off your list. You can’t use them anymore.
Step 5: Repeat
Keep emailing your winners and dropping your losers until you have a list of people you’ve sent at least five winning ideas to.
Now you have a list of people who think you’re a genius. They’ll pay whatever you ask to become subscribers to your super-secret, super-special, super-stock-picking newsletter. Charge them a lot. After all, what’s $1,000 when they’ll be able to make that back on the first trade?
Take your money and hit the beach for a nice, long vacation. When you get back, start the same scam under a different name with a different list.
Don’t try this at home
As I’m sure you’ve figured out, I’m not actually suggesting you start your own investment scam.
The point of this article is to show you how simple it is to convince people — yes, even smart, worldly people like you — that there actually is a super-secret, super-special something that’s going to change their lives.
But here’s the thing: There isn’t. And that’s true even if, like the people we theoretically emailed above, you believe you’re seeing it with your own eyes.
So, the next time anyone approaches you with a pitch so dazzling that you momentarily stop listening to your inner voice and start listening to theirs, remember this article and just say no.
And if you appreciate what you’ve read here, subscribe to my not-so-super-secret newsletter. It won’t make you rich — at least, not overnight — but it won’t cost you a dime. Honestly.
I hope that answers your question, Allison. See you all next time!
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The questions I’m likeliest to answer are those that will interest other readers. In other words, don’t ask for super-specific advice that applies only to you. And if I don’t get to your question, promise not to hate me. I do my best, but I get a lot more questions than I have time to answer.
I founded Money Talks News in 1991. I’m a CPA, and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.
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