“You got a great deal on that investment,” my friend Geoff Anandappa told me over breakfast yesterday. “We definitely don’t offer terms like that anymore.”
Five years ago, I bought a “guaranteed investment contract” from Geoff through his firm, Stanley Gibbons, in London.
When I first learned about it, the deal seemed too good to be true. So I did as much “homework” on the idea as I could. Then I flew to London to be certain. It checked out. It was legitimate.
The terms were too good… My worst-case outcome was a positive 7% annual return, for 10 years. My best case was dramatically higher returns… and my potential for profits was unlimited.[ad#Google Adsense]My risk was the company itself – would Stanley Gibbons be around in 10 years to pay me? The answer was yes… Stanley Gibbons has been around over 150 years. Since it traded on the stock market, its financial information was public knowledge, and I learned the company had no debt. This was an incredible opportunity.
Once I did my homework and believed it was legitimate, I leaped! I became the first person to buy the 10-year contracts.
These days, Stanley Gibbons no longer offers guaranteed investment contracts like that. If I hadn’t jumped on it, I couldn’t do it, ever.
The same thing type of thing happened to me with tax-lien certificates…
If I hadn’t jumped, I would have missed it.
You see, two years ago, I could buy all the tax-lien certificates I wanted in my county in Florida, at 18% interest. So last year, I was all set to do it again… But tax-lien bidding was so competitive, I didn’t buy a single one. If I hadn’t taken advantage of the 18% opportunity two years ago, I would have missed it.
These are just two examples of what I’m talking about.
When you come across an investment opportunity that seems too good to be true, you have two possible outcomes…
1) It’s not true. You’re missing something in the fine print or it’s a scam.
2) It’s legitimate.
Quite frankly, 99% of the time, it IS too good to be true. So you must check it out diligently. If anything – I mean anything – smells wrong or shady about the deal, it probably is. Do as much homework as you possibly can. Talk to people you trust, and listen without emotion (as best as you can) to the red flags they raise.
Then, trust your instincts. Don’t let your greed cloud the facts.
For the 1% of great deals that really are legitimate, they just about always fall in one of two categories:
Either they’re completely ignored (like the Stanley Gibbons deal, or tax-lien certificates)… or they’re completely hated (like real estate today, where you might find a “too good to be true” deal).
Too-good-to-be-true investment opportunities do exist… 99% of the time, they’re not what they seem. For the other 1%, they disappear as soon as the rest of the world figures them out.
When you find one of these, check it out thoroughly… and then jump. Don’t hesitate.
For me, I’m typically too cautious. In the past, I’d discover great ideas, but I didn’t jump when I needed to. So I missed ’em.
Now, I jump. Whether it’s a stock market bottom, or a little-known idea like I described above, I don’t hesitate anymore. I jump.
If you’re already prone to leaping before looking, you probably don’t need my encouragement here. But if you’re like most people, you want to wait for… well, I don’t know what… but you want to wait.
Don’t wait. First, do your homework. And if it still checks out, leap!
I’ve made the biggest profits in my investments by far by doing exactly that.
— Steve Sjuggerud[ad#jack p.s.]
Source: Daily Wealth