Imagine someone tells you about an investment capable of producing a 229% annual return.
Put in $1,000, receive $2,290 every year, and eventually get your original investment back.
Does that immediately sound like an incredible opportunity?
Or does it make you wonder whether something is wrong with the calculation?
When you're evaluating businesses, investments, courses, books, or advice online, that second question may be the more important one.
Anyone Can Be an Expert Online
The internet has dramatically changed how information gets published.
Decades ago, getting a book published or appearing on television usually meant passing through several gatekeepers.
Publishers and broadcasters had money and reputations at risk, so information was reviewed before reaching a large audience.
Today, almost anyone can publish a book, create a YouTube channel, launch a podcast, or advertise themselves as an expert.
That's created incredible access to information.
But it has also placed more responsibility on the audience to determine whether that information makes sense.
Don't Assume a Published Calculation Is Correct
Something appearing in a book, broker package, video, or professional-looking presentation doesn't automatically make it accurate.
Even people with experience can make mistakes.
For example, confusing return on equity with return on investment can produce numbers that make an opportunity appear much more attractive than it really is.
Instead of accepting the calculation because it came from someone who appears knowledgeable, work through the numbers yourself.
Ask whether the result makes economic sense.
Question Extraordinary Returns
If someone promises an unusually high investment return, don't focus only on how much money you could make.
Ask why the opportunity exists.
If someone genuinely discovered a repeatable method for earning extraordinary returns, why are they spending money advertising it to strangers?
Why aren't they simply using the strategy themselves?
That doesn't automatically mean every course, investment strategy, or opportunity is illegitimate.
It means extraordinary claims deserve additional scrutiny.
Understand the Motivation Behind the Message
Whenever someone gives you financial or business advice, consider what they ultimately want you to do.
Are they selling:
A book?
A course?
Consulting?
Coaching?
An investment?
Another high-priced program?
There's nothing inherently wrong with using educational content to market a legitimate product or service.
The important thing is understanding the relationship.
When you know how someone benefits from your attention, you can evaluate their claims with better context.
Authority Isn't the Same as Expertise
Being an author, podcast guest, social media personality, or conference speaker can create credibility.
But those things aren't necessarily proof that someone's advice works.
Even large platforms can feature guests whose claims haven't been thoroughly investigated.
That's why you shouldn't outsource your judgment entirely to the person conducting the interview, publishing the book, or hosting the event.
Listen to the claim.
Then examine whether the mechanics actually work.
Ask How the Strategy Works in the Real World
This becomes especially important when you're learning about buying businesses.
Someone might tell you that you can acquire companies with no money, produce extraordinary returns, or use a financing strategy that sounds almost effortless.
Don't stop at the headline.
Ask practical questions:
How does the financing actually work?
What will the lender require?
Where does the equity come from?
Who provides personal guarantees?
What happens if the business underperforms?
A strategy that sounds fantastic at a high level can look very different once you examine how it would actually be executed.
Slow Down and Think
Good decision-making isn't about automatically rejecting every unusual opportunity.
It's about developing enough skepticism to investigate before acting.
When something sounds unusually profitable, easy, or certain, slow down.
Check the assumptions. Understand the numbers. Consider the source. Look at the person's incentives. And determine whether the strategy still makes sense when applied to the real world.
If you want to learn more about creative private investments, check out my book Invest Local — available on Amazon or as a PDF from DCBBooklist.com.
Key Takeaways
Don't accept business or investment claims simply because they come from someone who appears credible. Understand the numbers, question extraordinary promises, consider the source's incentives, and make sure the mechanics work before putting your money at risk.
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