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There are soo many schemes which people feel good to invest without proper research. Some of them are online some are offline, but people mostly get scammed in online schemes. PONZi is the one in which people gets scammed in both ways. People are being believed to get high profits on very low investment and without any loss. But in reality, there is no such possibility. Ponzi schemes mostly are being held in local areas where fraudster could run it among localities. After some time, they use to move it online world where they don't need to do face to face interaction.
Now the thing is how are we suppose to identify so called "PONZI SCHEME". Let me discuss some things how we can identify these frauds:
HIGH RETURNS WITH LOW RISK
There re some schemes which use to talk about high returns on low investment. But there are no such possibilities of such schemes. 100 % high returns are almost impossible. You need to stay away from such schemes, which offer 1% ROI every day or double your investment.
There is a thumb rule for investment which says if any investment promises you to get more than 12 % ROI annually, stay away from such investments, these have high possibility of frauds.
Although, there are most investment advisors who expect to get 10-12 % ROI annually over a long term. There are very less amount of chance of any other investment which promise to return more than this.
From past couple of months, if you have seen non convertible debenture issues, it has stated to offer 9-10 % return. Those type of returns are guaranteed.
BUSINESS MODEL
One of the famous quote in investment:DYOR—Do Your Own Research.
It is common, you need to understand the business model of the project before investing. Talking about fraud schemes, these people have an amazing skill to explain their project in such a way that other person will easily get inspired. If a person doesn't have an ideology of business returns, avoid those investments.
INVESTOR CHAIN
You should know the what the PONZI means. The Ponzi scheme works by following multi-level models of marketing. They usually offer some percent for bringing more investors under you. Basically you need to make a chain and you can get some commissions for bringing investors. Also those schemes may show some proof and some type of government registration document but remember it can be forged or not relevant to model. So don't go by those proofs or forged documents, you may regret after that. So be aware of those schemes.
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