A couple of years ago during an entrepreneurship program that I conducted in Singapore, I met a lady that lost USD1,000,000 to a so-called a very lucrative investment opportunity in a neighbouring country. Not just that, her son was jailed because he invited one of the VIPs in their county to invest in the same investment, which turned out to be a total scam.
Just a few days back, I heard the same thing happened to someone I know. Even though the amount is not that much, but losing USD25,000 of your hard-earned money to a so called great investment opportunity is heart breaking especially if you plan to use the money for your children’s education.
Actually, I heard this kind of situation since my involvement in the world of business and entrepreneurship many years ago and I talked about this scam many times in my talk especially when the topic relates to money and investment.
Unfortunately, it almost impossible to wipe out this “epidemic” from spreading continuously and negatively “affecting” the lives of mankind because we still have lazy, greedy and ignorant people who are prone to get “infected” by this disease which is called a Ponzi scheme.
According to wikipedia.com “A Ponzi scheme is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned by the operator. Operators of Ponzi schemes usually entice new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent.”
A Ponzi scheme usually lures investors with high guaranteed returns and is named after Charles Ponzi who in 1920 lured and promised 50% returns on investment to his investors in only 90 days. In 2009 the largest, longest and widespread Ponzi scheme in history ended with the sentencing of its Master Mind to 150 years in prison, so if you plan to use the same scheme today, think again!
Therefore in order to ensure that we will not fall into this scam, here are some checklist that you can use to determine whether an investment opportunity is a genuine opportunity or a Ponzi scheme.
- You only need to invest one time then you will get huge fixed return on your investment either on daily or weekly or monthly or yearly basis and
- This return will be 10 or 20 even 100 times more than the investment returns given your financial institutions or the market
Regardless of the terms used by the so called opportunity, be it business, investment, program, project and the like, as long as it has the above characteristics, you must not give your hard earned money to it because chances are it is a scam.