The over-lucrative returns promised investors is what lures people to fall victims to Ponzi and fraudulent schemes all over the world. In most cases, what appears to be a consistent flow of return on your investment is actually money from a new investor. This is the strategy these Ponzi schemes use to convince people to part way with their hard-earned money. However, this scheme-strategy is not sustainable and will eventually collapse.
In the world of scams, frauds and Ponzi schemes, the high return which is the heart of the fraud makes it not surprising that people still fall prey to them. Unfortunately, nobody is immune to Ponzi schemes. It is worth mentioning that the longest-lasting and largest Ponzi scheme in history, by the infamous Bernie Madoff, was targetted at educated people. Some were knowledgeable in finance and understood how the financial system operates, but still fell prey as victims.
To this end, it is important to acknowledge that regardless of how people consider themselves smart, they can still fall victim to these Ponzi schemes – and the more confident people are that they can detect or spot a Ponzi scheme, the more likely they are to fall for one.
Currently, no one really know how much money investors who fall victim to fraudulent/Ponzi schemes have lost, and it’s pretty sad that some who are victims simply do not want to talk about or even report it at all. Moreover, it is very embarrassing – especially for some individuals or groups who should know better.
Additionally, we are in a country where financial literacy education low in both the formal and informal sectors of the economy, and little is done to salvage the situation. This is one main reason why newer Ponzi and fraudulent schemes like Diamond Money, Online investment schemes, Savanna crypto and others continue to exist – because they always get people to fall for them.
The public has a first-line duty to protect themselves and their hard-earned cash. While the schemes come in many different forms, they have several similarities.
What you need to do in order to minimise the probability of falling victim to Ponzi Schemes:
- First acknowledge that you can fall victim to Ponzi schemes, because even intellectuals and smart finance people fall for it. You need to make the right financial decisions by consulting an expect.
- Secondly, avoid emotional decision-making especially when it has to do with investment. Do not fall for the lucrative return that is promised since that is the bait. Note that any investment that promises higher return comes with higher risk.
- Consider first your financial freedom, business/job and the risk of losing your investment, before investing in any scheme that promises higher returns with no risk.
- Furthermore, get more information about the investment company, the investment product, background of the directors, who regulates their operation and whether they are duly registered with the appropriate institutions in the country of operation. A financial expert can help with the due diligence.
- Your best bet is to invest with a bank or an entity that is listed on the stock exchange.
- It is important to note that diversifying your investment portfolio is crucial to avoiding or mitigating the risk of losing all your life savings to Ponzi/fraudulent schemes.
The reality is that most of us are busy with our lives and do not pay attention to the numerous news items about fraudulent schemes in the country. Unfortunately, we often rely on public advice and media advertisement without conducting any checks or even validating the information before making decisions.
Moreover, due diligence must be done before any investment decision is made. Bear in mind that financial freedom begins with sound decision-making, and it’s important to seek financial/investment advice by consulting the right financial advisor for all your investment.
©Jerry J. A. FOLABI is a Financial & Economic expert who believes that ordinary people can do extraordinary things when given opportunity. He is a Change Maker with the ability of easily getting people to get things done for the good of humanity. Email; firstname.lastname@example.org