Pay RM5, get 5 friends to sign up and you get RM500 in a week!

Sound familiar?

What is Ponzi Scheme

Ponzi Scheme is a kind of ‘investment’ that pay the ‘investors’ high return in short time, almost guaranteed and free from external factors. It is like an easy money, with just one sign up, getting more people to join, and making more and more money.

This scheme named after Charles Ponzi, who ran the most Ponzi schemes in 1920s.

Is Ponzi Scheme safe?

Ponzi Scheme does not invested its money to any sector, but it use the investors own money to pay the other investors. It has the same concept with the Malay’s ‘kutu’, however, it promises higher return than kutu.

This scheme works like this. Let say ABC scheme offers $1,000 as return for every $100 invested with it. So 10 people joins the scheme with $100 capital. So it has $1000 in total. Each of them find 10 more people, so all together they have $100×10x10 = $ 10,000. This $10,000 divided to the first 10 investors, so each of them gets $1,000.

The chain goes on and on, until at the end of the day, the system will collapse itself, after nobody interested to join the scheme anymore.

Soon the scheme is strongly convincing, the frauder takes away all the money and disappear. Mostly it comes from the later investors.

My Friends Invest with This Scheme and She Really Makes Money

If she is among the first investors, she is lucky. Remember that there is no easy money. If you are offered with such high return with minimal risk, is extremely suspicious. Too consistent return, i.e. no dwindling is also a reason to be extra cautious.

Remember that rule of thumb in investment, high risk = high return, low risk = low return. So if you are offered with low risk high return investment, you should take a step backward, have a pause to think and do some research.

Don’t be too excited when you are approached by somebody who offers who with lots of money. Remember that the richest guy in town might be a drug dealer, but the risk is also very high. Once caught he’ll be sent to death sentence.

So mommies, don’t fall into any scheme of investment without you ensure of these:
1. It is registered.
2. It strongly follow the market trend either inclusively or exclusively.
3. It has proof i.e. prospectus, brochurs, etc.
4. It has a clear terms & conditions.

Always remember that there’s no easy money. Stop become victims because of our own ignorance.

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