Double Your Money, Guaranteed. Really.

By Brad Thomason, CPA

 

By the end of this post I am really going to tell you how to double your money, guaranteed.  I’m not kidding.  But you have to let me get a running start at it (or strictly speaking you could just scroll to the bottom.  But if you do you run the risk that I’m going to say something really meaningful in the middle, and you’ll miss it.).

Whenever we see the prospect of a big return on investment we are drawn to it.  We always doubt it, but nevertheless it grabs our attention.  Can’t help it; just does.  When that happens, I recommend a little three question test to help gauge whether or not it makes sense to dig into the opportunity, or just move on.

 

  1.  Is the possibility credible?  In other words, is there a good reason to believe the source of the claim.  You cannot get to an authentic big-win if you trip over a doofus (or a charlatan) as soon as you get out of your chair.  Check out the claim.  And the claimant.  Do they pass the smell test?  If so, you’re by no means through.  But you have a really good hopping off point if they don’t.
  2. How much capital can I deploy?  When I was a kid my Dad explained to me that you pay bills with dollars, not percentage points.  As basic as this seems, I have to re-explain this point to clients and colleagues several times each year.  The most stratospheric rate of return that you can imagine, within or without the bounds of credulity, only matters if it can lead to a significant amount of dollars at the end.  Which means you have to be able to stuff some capital into it before it has much meaning.  Interested in earning a 30% return?  What if you can only invest $8?  See what I mean?  Your view of the opportunity sort of changed, didn’t it?  And good for you, because it should have.
  3. How much work is going to be involved to get the return?  OK, so let’s say you found a credible opportunity, and you actually can pump some significant bucks into it.  You still aren’t finished.  There remains the matter of determining the cost structure involved.  Work required is a prime consideration, because it is not always clear what the underlying workload is going to end up translating into in terms of dollars and cents.  We’ve been working in various fields of the distressed real estate world for a decade.  And we make more money doing it than the vast majority of stock and bond investors out there.  But we also have to show up at the office, and often do a whole lot more, to book those results.  So to make the comparison apples to apples, you have to account for things denominated (like appraisal fees, lawyers, etc) and those not (like time and effort).

 

So, with all that said, I’m now going to tell you how to double your money, guaranteed.  In 1982 the US Treasury told the various mints to stop using pure copper blanks to make pennies.  They gave them a new zinc plug to use instead.  Pennies minted today have a thin coating of copper – just a few atoms thick – encasing a disc of the cheaper metal.  The older, pure-copper pennies, by contrast, are actually worth more today as base metal than as currency.  There’s about 2 cents worth of copper in an older penny.

You can confirm this claim through any of a hundred independent sources that are all just a Google search away.  Even though it is illegal to melt the pennies down, it doesn’t change the fact that the copper has the value, and there are people who buy all-copper pennies.  You can go into a bank, get a box of pennies, sort out the copper ones, and sell them for about twice what you “paid” for them.

You can double your money.

You can also get a good working clinic in points 2 and 3.  For even if you manage over the course of time to accumulate 10,000 pre-1982 pennies, you will alas have only profited a single Benjamin.

We can’t help but look when someone flashes us a big percentage return.  But that doesn’t mean we have to jump on it.  Which is good, because very often, we shouldn’t.

(But do note, I DID keep my promise…)

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