Overview – Can Investing Ever Be Viewed as a Way to “Get Rich Quick”?
I’ll be completely honest with you: I’m an investor because my ultimate intention is to make money. While this may sound selfish, I’m sure the vast majority of other investors share the same intention as I do.
Unless you invest with the sole purpose of entertaining yourself, most people probably wouldn’t pour so much time, effort, and energy into investing without the expectation of reaping some sort of financial reward. I’ve yet to meet anyone who is an investor simply because they have nothing else better to do – I’m sure there are more creative and less stressful ways to pass the time.
Investing is, by definition, the act of putting money down today to get more in the future. To be an investor fundamentally means having the intention to make more money in the future than you have today.
While the intention of making money from investing isn’t an inherently bad thing, problems start to arise when this goal is taken to the absolute extreme.
Some people want nothing more than to simply get rich quickly, no matter what. To make matters worse, they turn to investing as a way to potentially accomplish that goal. Can investing ever be used in this way?
If It Sounds Too Good to Be True, It Probably Is
Have you ever come across an offer or promotion that sounds way too good to be true, then upon further inspection find out that’s the case?
I’m sure you’ve seen advertisements claiming “lose weight quickly with this one simple trick!” or “get in shape in less than 14 days!” Most of these advertisements sound way too good to be true, and if a person ends up learning more they quickly find out they are scams or grossly misleading.
This same reasoning also applies to the idea of “get rich quick”. There are so many get rich quick schemes, pyramid schemes, Ponzi schemes, and other nefarious ways to attack the finances of innocent people it’s astonishing.
There is an abundance of news articles that detail the victims of such schemes, such as this one from 2019 claiming individuals could earn significant amounts of money online by simply using “secret codes”. If all it took to make a living was to use some codes, I’m sure everyone would already be talking about it.
Even worse, some nefarious people present investing as a way to make lots of money very fast by claiming to have inside knowledge on the “next hot industry” or the “hottest stocks to own within the next few years”.
You’ve probably seen this type of content on popular social media platforms such as YouTube, Instagram, and Reddit. I’ve even seen these sorts of scams on financial/investment news apps as sponsored ads.
You don’t need to be a genius to realize that most of these claims are absolutely ridiculous. Think about it for a second: if someone truly did find a way to make money from investing seemingly overnight, what incentive would they have to share it with the rest of the world?
The Myth of “Easy Money”
Whenever someone is quick to present you with a way to get rich quick, it’s usually in your best interest to be just as quick to turn them down.
The myth of making money quickly and effortlessly has long been a poison to society. Countless people have dug themselves into very deep financial holes because they fell for the false belief that they can earn money without so much as lifting a finger.
If you’re looking to make a quick buck from investing, my advice to you is to look keep looking. You’re not going to become an overnight millionaire from investing.
Sure, you can get lucky and select a stock that appreciates like a wildfire overnight, but this is not a sustainable way to invest. By sustainable, I mean that an investor can’t expect to consistently pick investments that will rapidly appreciate.
I’ve yet to hear of or personally meet an investor who became wealthy in an incredibly short period of time by correctly picking which stocks or other investments will rapidly appreciate in value without ever being wrong.
Earning money is never an easy thing to do. Regardless of how you earn your money, there’s a very high chance it involved a lot of hard work. Naturally, investing isn’t exempt from this reality.
Investing Involves Lots of Hard and Systematic Work
People who are foolish enough to approach investing as a get rich quick scheme will be in a for a very unwelcome surprise when they find out there’s much more to investing than simply “buy a hot stock, wait for it to significantly appreciate in value, sell the stock, pocket the profit”.
It’s true that some people have made money by taking this approach, but they are, without doubt, the exception and not the norm.
Again, this is one of those things that sound way too good to be true.
I can confidently say from my own experiences, backed up by similar experiences of countless other investors, that investing involves a lot of hard and systematic work.
Selecting a high-quality investment isn’t as simple as googling “which stocks to buy” and then proceeding to purchase everything on some arbitrary list put together by a complete stranger.
There are so many articles here on ilucidy detailing the different elements of investment analysis such as using ratios, reading financial statements, and understanding qualitative factors because it takes lots of work to arrive at an informed investment decision.
Not only is it difficult to find worthwhile investments, but the work continues even after a prospect ends up in your portfolio. To ensure the investments in your portfolio continue to retain their investment merit, they must continually be assessed every now and then.
If you manage your own investment portfolio, then you know exactly just how much work goes into building and maintaining it. It’s virtually impossible to create a portfolio that you can totally forget about.
Anything Worthwhile Takes Time to Build
One of the major selling points behind the idea of “get rich quick” through investing is that it takes minimal effort to get maximum gain.
The obvious problem with get rich quick is that, like anything in life, it takes time to build and develop anything that is worthwhile.
If you’ve ever spent years trying to build anything, whether it’s a certain skill set, a personal project, or even your body, then you know what I’m talking about.
I started weightlifting when I was 12 years old, and more than 10 years later I continue to work out regularly. In the first few years, I was frustrated at my apparent lack of progress – there were so many times when I questioned if what I was doing was worth the effort and pain.
Over time, I started to see tangible results, but this was after 6 years of constant training and perseverance.
Sure, some people choose to use steroids, but these people understand that steroids won’t suddenly make you more muscular overnight. Improper use of steroids in an attempt to get big quick leads to some very serious health consequences.
Starting out as a new investor is a frustrating experience for some people because they don’t see the results they want right away. Chances are, their portfolio’s value is barely moving and only has a few holdings.
Because of their impatience, these people may be seduced by the idea of seeing the results they want more quickly, even if it means doing something that may potentially compromise their entire portfolio.
Taking the time to construct a portfolio that will serve you well for many years to come is a difficult, yet very worthwhile, activity. Therefore, don’t be surprised upon realizing that it takes a lot of time to build it up.
You can’t expect to build a world-class portfolio overnight. Even the portfolios of some of the most prominent investors such as Warren Buffett and Seth Klarman weren’t put together in a single day.
In my experience as an investor so far, I’ve learned that when you’re forced to make the choice between rushing or taking your time, going with the latter has always been the best choice.
Attempting to rush something that inherently takes time will only end up in disaster.
Understanding the Difference Between “Get Rich Quick” and Making Very Good Decisions
It’s important to understand that there’s a difference between trying to get rich quick, and making money relatively fast as a result of some very well-thought-out decisions.
Get rich quick is such a major problem because it usually means doing anything you possibly can to make money as fast as possible. It doesn’t matter how you do it, or how much risk you take, the objective will always be this – to get the most money in the least amount of time.
This approach is so self-destructive because there are no parameters or limits to adhere to. It doesn’t matter how much damage is sustained as long as the goal is achieved, even if the damage outweighs the benefits.
On the other hand, an investor can enjoy very significant financial rewards as a result of very careful decision-making.
These individuals enjoy financial rewards in a relatively short period not because they took an “at all costs” approach, but rather because they took the time to make some very good investment decisions.
For example, back in 2016 Warren Buffett’s holding company, Berkshire Hathaway, invested in Apple. As of March 2021, that investment has made Berkshire more than $100 billion.
Berkshire made $100 billion in 5 years because Warren Buffett made a very good investment decision, not because his primary goal was to get rich quickly.
One approach puts your portfolio, your reputation, and your personal finances on the line. The other approach means putting in the necessary work needed to make a very well-informed investment decision.
Wrapping Up
If investing truly was an effective way to get rich quick, then many more people would already be investors.
It’s hard to earn money, whether you’re working a job, running a business, or putting together an investment portfolio. Anytime someone offers you a chance to make some easy money, this should immediately raise some red flags in your mind.
Anything worthwhile takes time to build and develop, and this is especially true in investing. If you hope to make a quick buck by investing, then I suggest you look somewhere else because investing won’t make you obscenely wealthy overnight.
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