The orders to buy Kollymagnus shares just keep dripping into the Fool Australia email bag, even after we revealed it as our first ever April Fool’s prank.

In case you missed the fun, you can read all about Kollymagnus here, including how it might be sitting on up to 400 million tonnes of Kolymoloptusium, a rare earth used in “self-cleaning vacuum cleaners, 5G microwave communication towers, green wind tunnels, CAT scan detectors and smartphone antennas.”

Proud Fools

It seems like word spread fast about Kollymagnus, with the shares even mentioned in the Commsec stock chat room. It was the proudest moment in the short history of fool.com.au.

We did also receive some emails from disgruntled Fools, not because they were upset in missing out on getting into this millionaire maker stock, but because we’d wasted their time.

They have a point. They see us as a reputable company and brand, and trust us to do the research for them (once we have our AFSL). When we say we’ve found a good thing, they say “bring it on.”

We’re flattered. It’s great consumers think of us so highly that they’ll want to follow our investing guidance. We hope to repay that faith in the years ahead.

Turn $10,000 into $1 billion

But we’re fearful as well. There are many companies and advisors out there who peddle high-risk investment schemes, promising unbelievable returns, all for “just $4,000 per year”.

One email we received talked about a friend who was making “9% on average per month trading call options with CFDs”.

We’re impressed. 9% per month is pretty damn good. By comparison, and contrast, the Aussie share market gained a paltry 2% for the first quarter of this year.

9% per month versus 2% per quarter.

It looks like a no brainer.

And when you do the maths, you’ll find making 9% per month, every month, will turn an initial investment of $10,000 into $1 million in just 4½ years.

Sign me up

At this stage, people can go one of three ways.

1. Wow. Sign me up. This is the get rich scheme I’ve been looking for. $4,000 per year is cheap compared to the riches I’ll be making.

2. Hmm…this sounds interesting, but I need to be convinced.

3. This is far too good to be true. I’m keeping a long barge-pole between this and myself.

By now, you may have guessed in which camp we’ve pitched our tent.

But if you’re still in camps 1 and 2, let us take the “9% per month, every month” returns a little further.

After hitting the big $1 million in just 4½ years, the next milestone would come just 8 months later, when your initial $10,000 would be worth $2 million.

After that, things get really exciting, with your next million coming in just another 5 months.

But why stop at just $3 million?

It’s during year 7 that things really get interesting. Not only do you hit the $10 million mark, but you also start to make $1 million per month.

It surely can’t get any better than this, hey? $1 million per month, every month.

But wait…

Be a billionaire: Own your own jet

Owning your own sports team, thoroughbred stables, 50 metre yacht, and Gulfstream jet are now within reach.

Just into your 11th year of earning 9% per month, every month, your $10,000 will have turned into $1 billion.

Now by this stage even the most optimistic investor might be thinking this is stretching things a bit far. They might be thinking maybe it’s unrealistic for anyone to make 9% per month, every month.

Let us put it bluntly…

9% per month, every month, is simply impossible.

Let us go even further…

Such returns are only ever possible over the short-term, and only then with the use of high levels of leverage, usually in the form of margin loans. As such, they are high risk strategies, which are prone to totally blow up.

We’d suggest they’d blow up at least once most years, and definitely at least once every 5 years. And by blow up, we mean a total wipe out, losing not just your initial capital, but possibly your life savings and house too.

If in doubt, we always go by the maxim that if it looks too good to be true, it almost certainly is.

The only way smart people can go broke

And whilst we’re at it, we consulted the bank of Warren Buffett quotes on using leverage to juice your returns…

When you combine ignorance and leverage, you get some pretty interesting results.

and…

Leverage is the only way a smart guy can go broke … You do smart things, you eventually get very rich. If you do smart things and use leverage and you do one wrong thing along the way, it could wipe you out, because anything times zero is zero. But it’s reinforcing when the people around you are doing it successfully, you’re doing it successfully, and it’s a lot like Cinderella at the ball. The guys look better all the time, the music sounds better, it’s more and more fun, you think, ‘Why the hell should I leave at a quarter to 12? I’ll leave at two minutes to 12.’ But the trouble is, there are no clocks on the wall. And everybody thinks they’re going to leave at two minutes to 12.

The Motley Fool aims to educate people about money, particularly the share market. Once a year, part of that education may involve our annual April Fool’s prank. Be warned.

We’re sorry to the people who felt we’ve wasted their time. But on the flip side, we hope they may think of the hour ‘wasted’ as an hour ‘educated’.

One cheap hour of education

Kollymagnus, quoted on the Darwin Stock Exchange, and cheap as chips at just 1.5 cents, was simply so good to be true that it didn’t exist.

But it didn’t stop some people from offering to invest over $120,000 worth of shares in this totally fictitious company.

If one hour of Foolish education can save the Australian investing public $120,000, we think it’s well worth it.

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