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Non-optimal returns are very different than being screwed over by scammers. One of the reasons that the US has such strong capital markets is that common investments are rarely out-and-out frauds. Whether that's due to the nobility of bankers or our relatively strong regulations is left as an exercise to the reader.

I think you vastly underestimate the costs of real businesses. Looking at BizBen.com, maybe 3% of car washes for sale are under $100k. The average McDonald's grosses $2.2m/yr and is reported to have profits in the 7% range, which would be ~$150k/yr. There's no way you can buy $150k/year in income for $100k.

You also don't account for the opportunity cost of the time and energy, or the increased risk. If I'm taking my investment money and buying myself a job, then if my investment fails my job is gone too. For a lot of people it's better just to put the money in a (tax-advantaged) 401k and spend their energy on what they're actually good at, which is probably not the evaluation and operation of small businesses.




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