Investment Fantasy: Don’t Believe Everything You Hear.

This article appeared on Marketwatch. It was written by a man who claims to know how to make you rich with nearly zero effort required:

As hard as it may be to believe, it’s possible to turn a single $3,000 investment into $50 million in a single lifetime. I can’t say that I have done it, but I’m going to show how you could.

This is a very tall order, one that requires an entire lifetime and more than one person to carry it out. If you’re a parent or grandparent, you can do this. Someday, a child or grandchild could be very grateful that you did.

This is the fourth column in a series on compound interest, which was famously cited by Einstein as one of the wonders of the world. For worthwhile background, you may want to read the first, second and third columns in the series.

The plan I am about to describe isn’t magic. It’s a recipe with four essential ingredients: An initial investment of $3,000, a Roth IRA, an investment that’s likely to grow at 12% over a very long time, and a  long lifetime (plus ample patience).

 Zero in one this phrase: “An investment that’s likely to grow at 12% over a very long time.”

Let me ask you this: what passive investments do you know of that will accrue at 12% annually over 40 years?

I can answer that for you: None. You don’t know of any passive investments that accrue at 12% annually. Neither do I.

Nobody makes 12% per year on passive investments. An active investor might achieve gains like this. But most Americans are not active investors. And that is not who the article is designed for. This article is, in contrast to “get-rich-quick” schemes, a “get-rich-long” scheme. But it is just as ridiculous.

You might be able to make 12% annually on passive real estate income. But this is not the same as sticking your money into a mutual fund somewhere and twiddling your thumbs for 40 years. Managing real estate is a big job. At the very least, you need to hire the right property managers.

The author is honest with us, if nothing else. He says he has never done this.

Of course he hasn’t. Neither has anyone else.

If there is someone who has done this, and has been successful, and is willing to tell you exactly how they did it – then take their advice.  And hook me up with this person, because I want to know how they did it too.

Until you meet someone who has generated $50 million from a mere $3,000 investment in passive mutual funds or ETFs, consider this advice fantasy.

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