Investment in mutual funds is considered as one of the ways to increase the source of passive income. This is the reason why most of the aware working executives tend to invest in different types of schemes. Apart from mutual funds, there are various schemes to increase your wealth but it is very essential to play safe. At present, in the market, there are large numbers of Ponzi schemes at play due to which you may have to suffer a large amount of loss in the future. Moreover, these schemes do not have proper transparency due to which you will not be able to get proper information about the exact person who is running the scheme in the first place.
What Is The Basic Working Criterion Of A Ponzi Scheme?
One of the basic working criterions of a Ponzi scheme is that you will be lured by a high return rate and that too without any additional risk. When you are involved in this kind of scheme, you not only lose a large amount of money but in certain cases, you can also have to face legal actions from the ruling government.
Once you invest your hard-earned money in such schemes, it gets very hard for you to pull it out. The working of such schemes is very complex and it gets very hard even for experts to understand it. Due to this fraudsters prey upon most of the potential investors and make them lose a large amount of their hard-earned money.
How Can You Point Out A Ponzi Scheme And Protect Yourself?
Ponzi schemes are not regulated properly. To protect yourself from any potential threat in the future, it is very essential to acknowledge whether the agent is registered as a financial advisor or not. It is essential to acknowledge whether the company is duly registered with RoC or not. This way, you will be sure about the proceedings and motive of the company. Most of the fraudsters also make you fill in long forms and gather detailed information to make the process look genuine, but it is very essential to inquire with the ruling financial authorities before signing any document.
No Downsides Involved
Most of the fraudulent Ponzi schemes will tell you that they do not have any downsides to propose to look more appealing. Contrary to this, genuine schemes make investors aware of the possible risks which they might have to face. This is so because the profit from the scheme is directly related to the progress made by the market and economy of the state. In case, you were told that the present scheme works under the fail-proof system, then you should turn down the opportunity to invest in it.
Guarantee About Fixed Return
Most of the genuine schemes get influenced by the market and investors have to face a certain degree of loss or profit now and then. In case, you were told that the scheme will provide you a fixed rate of profit every month then it is a scam. Furthermore, few schemes also lure investors by stating that they will get the outrageous return within a short time. Gaining a considerable amount of return on financial instruments require a considerable period since it is a long term investment.