PONZI SCHEMES; SCHEME WHICH CAN BE A NIGHTMARE!!!!!!!

PONZI SCHEMES; SCHEME WHICH CAN BE A NIGHTMARE!!!!!!!
  • A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors.
  • It is a fraudulant scam which generates returns for earlier investors with money taken from later investors.
  • when the flood of new investors dries up and there isn't enough money to go around. At that point, the schemes unravel.
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HOW TO IDENTIFY A FAKE ONE!!!
  • A guaranteed promise of high returns with little risk
  • A consistent flow of returns regardless of market conditions.
  • Investments that have not been registered with the Securities and Exchange Commission (SEC)
  • Investment strategies that are secret or described as too complex to explain
  • Clients not allowed to view official paperwork for their investment
  • Clients facing difficulties removing their money.
HOW IT ACTUALLY WORKS!🤔🤔
  • Similar to a pyramid scheme, the Ponzi scheme generates returns for older investors by acquiring new investors, who are promised a large profit at little to no risk.
  • Both fraudulent arrangements are premised on using new investors' funds to pay the earlier backers.
  • Companies that engage in a Ponzi scheme focus all of their energy into attracting new clients to make investments.
DO THIS IF YOU ARE STRUCK IN ONE!!
  • the first step would be trying to get your money back.
  • Do not invest any more money unless your doubts have been resolved.
  • Keep a Check on your greed and take all the due diligence steps before you go any further with the scheme.
  • report the business to the authorities.

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ETFs vs Index & Mutual Funds

They are all basket of assets you are trading in bulk:

  • Mutual funds are actively managed, meaning their fees are rather high.
  • Index Funds are just tracking a segment of the market. Low fees but are only priced once a day. It's the preferred passive investment strategy. 
  • ETF are like a combination of the two. They are more versatile & usually track industries, commodities etc. ETFs are more akin to equities than to mutual funds. They can be bought like individual stocks. 
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