Tuesday, 9 October 2012

IF something is too good to be true...IT IS, TOO GOOD, to be true

Have you ever heard of these Ponzi style schemes:

Pak Man Telo
Faza Amal
Lexus Ventures

The way how these schemes work is quite simply by feeding on human greed and gullibility. The scheme's proposers will promise would be investors with returns which are too good to be true, something between 2%-10% per month, yes it is TOO GOOD to be true. Consider this: A licensed Financial and Banking Institutions can only offer returns per year but these schemes can offer sometimes daily, weekly and monthly returns.

How Pyramid Schemes Work

How the scheme work is quite simple, a Scheme receives money from newer investors(new level) to pay the older investors(on the higher level) and take profit on whatever the balance is....and when new investors stop putting in money, the money will dry up and the scheme will fail and disappear leaving a lot of misery, broken family and lost hope in its wake.

These are bare facts:

"It's mathematically impossible for everyone to make money in a pyramid scheme. For example, if each recruit needs to find 10 more people to recoup the cost of his or her initial investment, the eighth level of the pyramid would have to recruit a billion people to make back their money. And the next level would need 10 billion, nearly twice the population of the Earth.
In fact, pyramid schemes don't work unless somebody loses. Those at the bottom of the pyramid are essentially defrauded by those on top. It's a mathematical fact that no matter how many people join a pyramid scheme, 88 percent of the members will be on the bottom level and will lose their money [source:Pyramid Scheme Alert]. Pyramid schemes are illegal because people don't lose their money due to normal market forces, but because the system requires them to lose so that a few at the top will win." Source here

Madoff Ponzi Scheme
Source here at FreakingNews.com
Yes, each one of the above schemes promised impossibly high returns per month and each one folded up when there are no more new  investors gullible enough to invest in the scheme

Now, have you heard of the recent Bank Negara raids on Gold Trading business premises in Malaysia:

Crackdown on gold trading firms to continue

I think these gold trading schemes sounds like it, smells like it, damn it probably is another Ponzi like pyramid scheme.  Don't blame Bank Negara for your troubles OK gold investors, blame yourself for being greedy and gullible....Read this very simple explanation: 

Of Ponzi schemes — Tay Tian Yan

A word of advise by a once gullible and greedy investor, MYSELF: 

There is no easy way to accumulate wealth. You have to go through the mill, you have to understand first and feel how difficult it is to earn even 1 Ringgit. 

The key to making money is not how much you earn, it is how much you can save over time.
“Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.” a quote by Albert Einstein. See how it works here.

When I talk about time I am talking about saving from young till you decide to retire in say 25-30 years time. 

There is no shortcut to wealth, if you need to take monetary risk for higher gains  then go for institutions that are recognized and approved by the Gomen..Bursa Saham, Banks, Provident Funds, Mutual Funds, Insurance Funds etc.

.....and if ever someone walk up to you and proposed a Scheme which guarantees 2%-10% return per month on your investment...Run friend....run like hell the other way.

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