It all comes back around…
A few months ago I wrote an article about FOREX (I Want it NOW—Adventures in FOREX)—a sexy, “smart money” arena where you can make hundreds of thousands of dollars in an instant… OR, lose your shirt.
(And unfortunately, it’s a lot easier to do the latter!)
If you haven’t read that article yet, I recommend you do so now before continuing, as it will give you the background for today’s missive (don’t worry, it’s short and sweet).
I called out a specific ad I had seen floating around the Internet,
“You Could Have Turned A Simple $10,000 Investment, Into $251,000 Over The Past 48 Months…”
And warned about the risks of the FOREX market (which of course the ad and subsequent webinar avoided mentioning).
Now, I am not “anti-FOREX” whatsoever—in fact, it’s a great place to make a lot of money.
But there’s a rather famous saying in poker (and in investing)…
“Do you know who the sucker is at the table?
Because if you don’t…it’s YOU!”
And I desperately do not want YOU, dear grasshopper, to be the sucker, nor the “dumb money” (and I know that thankfully you are not, because hey, you’re subscribing to Kung Fu Finance and taking charge of your financial education!).
But I just learned from a dear KFF subscriber today that in fact, those who did fall prey to that very same ad not only did not turn their $10,000 into $251,000…they lost 60% of their money.
Now, rather than going on about how unscrupulous (or perhaps just wildly naïve) this advertiser was, I’d like to focus on how you can protect yourself from this in the future, because unfortunately, these type of scams exist all around us and are quite easy to fall prey to! (In fact, I suspect the advertiser fell prey himself—he’s not necessarily an evil guy, just ignorant of FOREX).
So what can you DO?
How can you tell the truth from the hype in these situations?
I have three rock-solid suggestions for you.
1. Get to know the actual person as much as you can.
I stress this often here on Kung Fu Finance, but whenever possible, get to know the actual person behind the opportunity. (In fact I devoted an entire article to this entitled “People Power”).
What are they like? What are their values? Why do they want you to invest with them? What are their motives?
You will fare so much better if you can get to know them in person and establish that they, like you, have strong ethics and respect and reflect the same values and morals that YOU believe are important.
(Note: this is why I like Doug Casey so much—yes, he’s outspoken, but the guy has absolutely unparalleled integrity and believes that “doing what you say you will do” is the highest moral code of all—can’t argue with that!).
But this alone is not enough. You must also…
2. Get to know the investment as much as you can.
Here is where many people slack off…
(I know, I know, it’s tempting! And we’re all very busy.)
But this is important!
It’s very true that if you know, like, and trust the person recommending you something, as in example #1 above, it’s easy to just say, “well, Bob’s a good guy and he thinks this will be great so I’ll just do what he says.”
Newsletter writers tear their hair out about this all the time—yes, they do their best (at least the good ones do) to bring you their best recommendations, but at the end of the day it’s still YOUR decision and YOUR money on the line.
And unfortunately, as these unsuspecting FOREX investors found out, simply putting money into something that you don’t understand but that promises you a whopping, wild return (“turn $10,000 into $251,000!”) is usually a recipe for disaster.
In order to invest in the FOREX market (or any market, for that matter…), you need to do some research and figure out how that market works. What are the risks? What are the rewards? How long is your money tied up? How do you get your money out? Etc.
3. Find some other investors who know that market better than you do and who have actually participated in it and see what they think.
Network, network, network! This might at first seem difficult if you live in a remote area (how am I going to find a FOREX investor in the boondocks?) but with the advent of the Internet it is becoming easier all of the time.
(Note: This is why I love investing conferences so much—you can meet and greet actual, honest-to-goodness boots-on-the-ground investors who have already done exactly what you’re trying to do, and you can talk to them about their experience! This is where you’ll hear “the real deal”, and trust me, it’s invaluable.)
I know not everyone can make it to loads of live investment conferences each year, but you can also seek out local area investment groups and clubs, and can find like-minded investors on the Internet (ahem, like here on Kung Fu Finance!).
For example, I know KFF subscriber Ryan has experience with FOREX, and if and when I jump back into the FOREX market (I haven’t been in it recently) I will absolutely seek him out first!
Make other investing buddies, swap stories and tips and tricks, and see how quickly your knowledge and expertise explode.
(It’s awesome, I promise…and of course I hope you’ll start here on Kung Fu Finance!)
Anyway, this is actually not at all what I planned on writing today, but when I received that email from a dear KFF subscriber I just had to get this out.
I want to issue a very warm welcome to all new subscribers and a hearty thanks to those of you who’ve been with me since the beginning…I’ve got big plans in store for you! 🙂
Please let me know what you think about Forex in the comments!
To your financial success,
— Kung Fu Girl