How to avoid ponzi scheme

[Ayuba Ernest]

A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from profits generated by the scheme. Operators of Ponzi schemes usually entice new investors by offering higher returns than other investments, with the underlying assumption that the scheme will be able to generate enough income to cover any payments made to earlier investors. When this fails, the scheme collapses.

The best way to identify a ponzi scheme is to look for certain red flags. If you see any of these signs, it's best to stay away:

1. The company is asking for money up front.

2. The company is promising high returns with little or no risk.

3. The company is not registered with the SEC.

4. The company is not licensed to do business in your state.

5. The company is not transparent about where your money is going.

6. The company is not responsive to questions or concerns.

If you do all this, you can avoid ponzi scheme or avoid being scammed by one. Thank you for reading and do share your thoughts.

 

[Holicent]

A ponzi scheme is a form of fraud in which the operator generates returns for older investors through revenue from newer investors, rather than from legitimate business activities or profit of financial trading. Operators of Ponzi schemes usually entice new investors by offering higher returns than other investments and telling the investors that their money will be invested in opportunities claimed to generate high returns with little or no risk. In many ponzi schemes, the fraudster keeps raising the amount they pay to older investors, who are told that profits are being earned by the newer investors. Ponzi schemes often promise very high returns at little or no risk, where an individual becomes suspicious if they are required to lock up their money for a long time period with no return. A ponzi scheme is similar to a pyramid scheme in that they are both based on the recruitment of new investors. This recruitment is done through existing investor education or referrals, and the investors pay returns to all investors equally.