Nothing good happens above 10% APR
If you are something of a dinosaur, like me (just kidding…), you might remember perhaps one of the best comedy shows on TV called How I Met Your Mother, which started airing in 2006. The 18th episode of the first season of the show was called “Nothing good happens after 2a.m.” and it was about how every decision made late at night was probably wrong, so the best thing you can do is to just go to sleep.
This quote occurred to me, as I was going through my Medium page, reading financial stories and I was astonished by the number of stories offering “insights” about magic platforms that return more than 10% daily followed, most often than not by a corresponding affiliate link. The worst thing is many of the proposed investment solutions have already been proved to be scams, yet they still are featured in Medium. Hence, given the fact that the rule stating that “if something sounds too good to be true, it probably is” turns out to be very subjective, I decided to propose a quantified alternative:
Nothing good happens above 10% APR!
Let me explain why:
Interest rates are the price of money. If I give you $100 and you give them back to me in one year on 1% interest, that $1 is the price you pay to me to let you use my money when you need them. For this transaction to make sense you need to do something with that money that will generate more than $101 dollars, otherwise, you end up at a loss.
And if the largest corporations of the world such as Microsoft or Meta, which literally have each and every one of us as clients cannot guarantee returns of 10% in a day, in a month, or in a year, how can some unknown, unlicensed platform guarantee that can do so?
Most of those scammers bet that you will invest in things that sound fancy, such as crypto*, so that you do not understand them fully, as long as their platforms seem sophisticated enough and pretend to offer generous returns. Recently, in Greece, where I live a Ponzi scam was unraveled that claimed it would pay its subscribers more than 6 times the minimum wage for liking pages on Facebook, thus allowing them to get back the subscription money within a month. Unfortunately, many people did not stop to think about how this platform is going to generate that much value that will offer returns equal to executives of large firms to everybody.
But scammers are always one step ahead, so by setting the maximum sought profit at 10% APR, which is the average annual return of many stock indices, you are much less likely to fall victim to a scam, even if you miss out one good investment opportunity in the process.
And last but not least, I would like to see the Medium community react against those who offer links to scams and who think that are in the clear because they “are not offering investment advice”.
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