20% monthly mining vs 5% monthly trading
I recently meet a guy who invested his money in 2 systems.
1) The first one is mining. He gave 20.000 euros to this company ([redacted]) and they promised to give him back 20% a month. There are different tiers, like from 1000 to 10000 you get 11%, from 10000 to 20000 you get 16%, etc.
It could be a scam but this would be a nice passive income. They say they have a big farm in Norway where electricity doesn't cost much.
What do you think about this?
2) The second one is trading. He sent BTC to these guys and they trade forex/crypto/commodities. They guarantee you at least 5% monthly return on your investment.
I again smell a scam. What you think?
I've been burst 7k on bitconnect so i'm not really interested in these things. Because these 2 are different and 1% daily is unsustainable but 5% monthly looks more realistic, I would like to know what you think about it and if any of you had good experiences in similar investment. Thank you
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The stock market returns about 10% a year. This doesn't happen every year some years might be below (or even a negative return) but typically over longer spans of time (like 5 or 10 years) you can expect a 10% return. Anything else is probably a scam, even mutual funds that advertise 20% returns only do this for a few years and over the long run fail.
This isn't to say that you can't do better than average but the average is about 10%.
Stock market returns average about 10%
A sense of reason might be the first casualty of a bull market.
Investors get comfortable when stocks rise consistently. In a roaring
market, stocks seem to go only up, up, up, and 30% returns appear
perfectly normal. Everything you buy turns to gold — but then comes
the crash.
Over time, stocks, as measured by the Standard & Poor’s 500 index,
return about 10% annually. The index comprises America’s 500 largest
publicly traded companies and is considered the benchmark measure for
annual returns. When investors say “the market,” they mean the S&P
500.
Source: www.nerdwallet.com/blog/investing/average-stock-market-return/
As far as anything associated with bit coin, you can make nice returns, but it is extremely volatile and the price is based mainly on belief (whereas a company has assets that are worth something if things go south ), and as of now the hype is dying down and so is the price. I would stay away from anything related to a high risk investment. Before investing in any opportunity, you need to know how they are going to make money. So look at other players in the market and their returns if the information is available. 5% a month or more seems way to high. The other big red flag is the return goes up with the amount of investment, which incentivizes you to give up your money, and is unusual for most investments.
Do yourself a favor, find a nice medium risk mutual fund to invest your money in and get your ~10% a year.
I will answer this as an ex-miner actual trader.
Mining (I guess you're talking about Bitcoin) is not worth anymore, at least not for individuals. If you are part of mining group it may not be worth either, just bear in mind that electricity costs, the difficulty and the hardware needed that is not yours will cost money, and the group that offers the mining has to earn money so what is left of all that may very well be a scam even more if they offer a 20% monthly. Bear in mind Bitcoin is in its long time low values, it may recover but there are still options for it to fall near the 3000 area, so if the 20% they offer has in mind Bitcoin value your friend may very well end up scammed.
Trading is another thing, you may make much money (but you may very well end up loosing it too) if you know how to trade but I wouldn't leave that in some "experts" hands. Those experts play with tons of coins and don't mind loosing here and gaining there while the total is positive for them, but that doesn't mean it will be for you.
If you/he are interested in trading learn about TA (https://www.babypips.com/ is a great place to start) and trade yourself. There are many many markets out there for crypto trading that let anyone do his own trades without the need of intermediaries.
My advise would be to learn and do your own trades, and even if you don't know how to trade but think cryptos (Bitcoin in this case) have future you can buy now and just wait for 5 years, you will surely end with huge proffits.
Question: if I could guarantee 20% monthly, why would I let you in on it? I wouldn’t. I’d mortgage my home, take out the biggest loan I can, and keep the 20% myself.
And that’s how you know it’s a scam. If it was true, it would not be offered to you.
Anybody that guarantees a monthly (for example 5%,11%,16%, 20%) return that would be great if that was a annual return, is running a scam.
If they guarantee they could take your 20K euros and make enough money to pay you a guaranteed 24K euros 30 days later and keep the rest for themselves, then they are running a scam.
If they are legitimate then they should be able to start small and build up to a point where they can be basically printing money, and they don't need to solicit money from "friends" they recently met.
So yes it is a scam.
Aside from the points everyone else has made, consider this: if they fail to live up to their guarantee to return 5% a month, what are you going to do about it? Do they live in the same country as you do? Do you really even know who they are and where they are actually located?
If you go to your local police and tell them "Some folks on the Internet talked me into sending them 20.000 euros, and now they won't give it back!" do you think they are going to send a detective half-way around the world to a nation that your country may not even have an extradition treaty with?
Are you going to hire a lawyer in a distant country to bring suit in that country's legal system to enforce their promise?
Never rely on a guarantee unless you have some legal leverage to enforce the honoring of the guarantee.
You can't scale cryptomining in a timeframe like that depending on how much money you have invested in it.
But none of that matters. It doesn't matter what they promise that they're doing with the money if the interest rates are such that they wouldn't need your money.
I'm Norwegian and I think I've heard about the first example in the news.
It's not so much that it's a classic scam that they've covered their asses (or at least think they've done so, let's see what The Man says if they try anything crazy) and will reduce the rates if the cryptocurrency prices drop to the point where they can't deliver on their promises.
There's still no such thing as a free lunch, and if it's the one I'm thinking of I'm pretty sure they've already failed to deliver which is why they were in the news.
Like other users have pointed out, the returns are very high. High returns come with high risk (think about winning a lottery v/s buying a government bond.) If someone actually can make 20% monthly with a low risk, they wouldn't need your money. The best hedge fund in the world (Renaissance) is not open to the public---you have to be working there to invest money.
The return is your own money, until it isn't
The way these scams often work is you buy a 'thing' and promise to pay back X% per month/year. Doesn't really matter what the 'thing' is - hotel rooms, parking spaces, vineyards, bitcoin miners...
Let's say they offer to pay 10% per month. What will happen is things seem to go fine for a few months, then all of sudden things go a bit quiet.
Up until month 11, they're just paying back the sum that you paid upfront. Meanwhile, they're working out some quasi-legal way to extract the cash from the company (assuming it is a company). Let's say they pay themselves a big dividend, or a pile of equipment that just happens to get stolen, or whatever... Then the company just happens to go bankrupt, and there's nothing to pay you back with. Meanwhile they start up a different company and repeat with a new batch of suckers.
Both of these "investments" bear all the hallmarks of a Ponzi Scheme, where investors are promised high and consistent (but not usually outlandish) returns on their money but in reality the principal has simply been stolen. Symptoms like "too good to be true returns", "different tiers of investment", "returns significantly above the value the company could borrow money commercially", etc. are usually very good signs to be wary of.
There are basically two variations on the theme;
The Classic Ponzi
Investors are told that their money has been invested in some sort of poorly understood money-making scheme, then given an actual % return on their money. In reality their dividends are paid for by taking the investor's own money (and that of later investors) and giving it back to them in tranches.
Madoff Ponzi
With the Madoff Ponzi, investors aren't given cash dividends and are strongly discouraged from taking money out of their "account" which then appears to appreciate at a constant rate. Those who give money are regularly advised not to withdraw their money because of a nebulous rule that forbids them them from getting the best return on their money. Those who do withdraw money are (usually) given it promptly for fear that they'll call the authorities.
Depending on whether your friend is receiving dividends or simply a (bogus) annual statement of their account value will determine what kind of scam they've fallen for (or are trying to suck you into).
A 0,000 (US) compounded monthly at 20% would become a .6 billion in 5 years. Unfortunately, if this was a non sheltered account, you'd be in the maximum tax bracket and you'd only make a 'mere' .6 billion.
TANSTAAFL (There ain't no such thing as a free lunch)
If it sounds too good to be true, it usually is
Money doesn't grow on trees
How do you spell M-A-D-O-F-F ?
IT'S A SCAM!
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