The math behind €1,000 a month with €50,000
€1,200 a month from €50,000 invested? A 24% annual return doesn't add up with Ibex 35 dividends. Here's how the scam works.
English · Original discussion in Spanish · Published
The math behind €1,000 a month with €50,000 in the stock market
Is it possible to earn €1,200 a month by investing €50,000 in dividends? The math is unforgiving: a 24% annual return that bears no relation to the average yields of Spain's Ibex 35, which hover around 3-4%. Any promise above that deserves close scrutiny.
The myth of the guaranteed 24%
A retail investor boasts of achieving those returns by buying shares in large Ibex companies when they are cheap and selling when they are expensive, a strategy any finance textbook would deem unsustainable in the long run. The real dividends of Spanish blue chips rarely exceed 6% a year. To reach €1,200 a month you would need around €300,000 invested, not €50,000. The gap between the two figures is an abyss that can only be bridged through speculative trades or, quite simply, through deception.
Red flags: from pyramid schemes to the 'swindler' friend
The pattern repeats itself: someone close shows impossible numbers, but instead of documenting losses they only show gains. Financial literature calls this survivorship bias. The investing community agrees that promises of such high returns usually hide recruitment schemes. The doubter himself acknowledges the "implausibility" of his Argentine friend's story, whom he calls a "swindler". Prudence dictates not investing a single euro without seeing audited balance sheets.
The question that remains is why, with all the information available, we keep falling into the same traps. Perhaps because the hope of getting rich without effort is stronger than any actuarial calculation.
Related discussions in the forum
Is it possible to earn €1,200 a month by investing €50,000 in dividends? The math is unforgiving: a 24% annual return that bears no relation to the average yields of Spain's Ibex 35, which hover around 3-4%. Any promise above that deserves close scrutiny.
The myth of the guaranteed 24%
A retail investor boasts of achieving those returns by buying shares in large Ibex companies when they are cheap and selling when they are expensive, a strategy any finance textbook would deem unsustainable in the long run. The real dividends of Spanish blue chips rarely exceed 6% a year. To reach €1,200 a month you would need around €300,000 invested, not €50,000. The gap between the two figures is an abyss that can only be bridged through speculative trades or, quite simply, through deception.
Red flags: from pyramid schemes to the 'swindler' friend
The pattern repeats itself: someone close shows impossible numbers, but instead of documenting losses they only show gains. Financial literature calls this survivorship bias. The investing community agrees that promises of such high returns usually hide recruitment schemes. The doubter himself acknowledges the "implausibility" of his Argentine friend's story, whom he calls a "swindler". Prudence dictates not investing a single euro without seeing audited balance sheets.
The question that remains is why, with all the information available, we keep falling into the same traps. Perhaps because the hope of getting rich without effort is stronger than any actuarial calculation.
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Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (14 replies).
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