Don’t get swindled: Ponzi Scheme warning signs
High returns. Avoid claims of ‘high returns’, ‘guaranteed returns’ and ‘no-risk’. Remember: If it’s too good to be true, then it probably is.
Consistent positive returns. Most investments go up and down over time – that’s just the nature of the economy and the market. Be cautious about any investment that generates consistent positive returns.
Non-specific details. Schemers are usually big with the promises and vague on the details, so if the terms are hazy, then the investment is probably shady.
Complicated business model. Conversely, a Ponzi Scheme can be deliberately complicated – it’s so the investor can’t work it out. The bottom line is, if you don’t understand what you’re investing in, then don’t invest.
Unregistered investments. Ensure your investment is registered with government-backed state regulators.
Unlicensed sellers. Most Ponzi Schemes involve unlicensed sellers or unregistered companies. Once again, take the time to check credentials with your state’s authorities.
If you’re unsure about an investment opportunity, consult a financial advisor or investment expert before making any decisions.
Source: Ponzi Schemes. https://moneysmart.gov.au/investment-warnings/ponzi-schemes. 2020.