Testing a promised return
A promise of gain can be checked without knowing any finance: you only have to turn it into figures. A return advertised per month becomes a return per year, then a multiplier over a few years. Often, the result contradicts itself.
Everything is worked out in your browser. Nothing you type leaves your device. How to check it.
Enter the return being advertised and a length of time: the translation appears here.
One of the boxes does not hold a readable number, and it is flagged. Spaces, commas and full stops are accepted.
One of the boxes holds a perfectly readable number that describes no real situation, and it is flagged. For instance an advertised loss of 100% or more, a sum of zero, or a term shorter than one month.
| Equivalent return per year | % |
|---|---|
| What the sum would become | |
| Multiplied by | |
| Time to double, in months |
Ask yourself one question in front of that result: what real activity would produce this money, every month, without ever missing a month? If nobody can answer precisely, the money paid to the old members comes from the new ones, and that always stops.
The method
- From the month to the year: annual return = (1 + monthly return) raised to the power of 12, minus 1. Five per cent a month does not make 60% a year, but close to 80%.
- Over several years: final sum = starting sum × (1 + monthly return) raised to the number of months.
- Time to double: the logarithm of 2 divided by the logarithm of (1 + monthly return). Without a calculator, the rule of 72 gives the same order of magnitude.
Three questions are enough
- Where does the money come from? A vague answer, or one that changes from one person to the next, is an answer.
- Can I withdraw a small sum right now? A refusal, a new delay or unexpected charges settle the question.
- Who authorises this person to offer an investment where I live? Every country keeps a public list of authorised firms: see Your country.
There is one demand to refuse without discussion: if you are asked to add money in order to release money, the answer is no. The detail of that trap is on the The false promise of return page.
A useful reference point
According to the OECD international survey of adult financial literacy, recorded in 2022-2023 across 39 countries and economies, 41% of adults know that cryptocurrencies are not legal tender, which is to say that nobody is obliged to accept them and no institution guarantees their value. That does not say you should avoid them: it says that the guarantee people talk to you about often does not exist.
What this tool does not do
- It does not say whether an offer is a scam: it translates a figure, and you are the one who judges.
- It neither recommends nor warns against any investment, and it names none.
- It does not replace checking a firm’s authorisation with the authority in your country.
Read next: return, risk, legal tender.