Don’t Be Fooled Anymore! Check Out How To Identify Ponzi Schemes

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There are some ways you can identity all the ponzi schemes targeted at deceiving you into losing money. These are some o those ways.
Inasmuch as it is important for you to make investments in order to build your finances, you must be wary of Ponzi schemes, which would ultimately make you lose money

Extraordinarily high ‘guaranteed’ returns

Ponzi schemes usually offer abnormally high ‘guaranteed’ returns of more than 20 per cent per annum (or even more ridiculous — per month). The attractive returns are used to lure investors to invest in their products. However, there is no such thing as guaranteed returns in this world (even the money in your savings account can disappear if the bank goes bust). There is always some degree of risk to every investment.

If you think about it, if a company is able to promise investors 20 per cent returns per annum, this means that they have to generate returns higher than that to turn a profit. And if this company is able to generate annual returns above 20 per cent consistently, the owner of the company should already be one of the richest persons on the Forbes list.

Always be sceptical when schemes offer you abnormally high and consistent “guaranteed” returns.

Vague business model

Whenever you see a scheme that guarantees high returns, ask them just how they would be able to generate these returns if you were to invest with them. They would most likely tell you that the investment process is confidential and they cannot divulge the details. Then, how can anyone invest in a company if they don’t understand how the company actually makes its money?

Even if they do explain how they make the money, the business model is usually overly complex and hard for a normal individual to understand. The point is: don’t invest in a company where you don’t understand how they are going to generate returns for you.

Investment products are usually foreign

According to, most Ponzi schemes’ investment products are usually based in places far away from where they raise funds. Investors who invest in such schemes are usually normal folks who do not have the time or money to fly overseas to conduct their due diligence on the products the company is selling.

Think about it: if an overseas investment is really that good, shouldn’t it have been bought up by local investors before it even reaches your country? The main reason many schemes raise funds in another country is usually because they are unable to sell successfully in their home country.

Sales personnel have attractive commissions

Sales personnel in Ponzi schemes are usually highly motivated to promote the scheme because their commissions are very lucrative.

Therefore, always find out what the sales personnel commission structure is like. If it is too high, it is usually unsustainable.

They are advertised as ‘risk-free’

If you are told that a particular product has “guaranteed” returns anywhere from 24 per cent to 100 per cent per annum, you should ask how the company is able to sell so many different products, and still generate such high and consistent returns for investors.

You should also ask them what the risks for the investments are.

Most Ponzi scheme operators would tell you that there are no risks. When you hear things like that, you had better run. All investments come with a degree of risk– it all depends on how you manage it. Since the sales personnel don’t even know what the risks are, what more do average folks know? There is no such thing as a risk-free investment. Simply avoid companies that tell you that their investment products have no risk.

The sixth perspective

While it’s easy to say the fault squarely lies on the perpetrators behind a Ponzi scheme, you only have yourself to blame if you invest in one. Instead, seek to increase your investment knowledge to prevent yourself from ever falling for such scams. Be sceptical of investments that are too good to be true, and always do your due diligence before investing in any investment products.


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