if it sounds too good to be true it
probably is especially when it comes to
money hi I’m Rebecca Brayton and welcome
to watchmojo.com and today we’ll be
learning more about Ponzi schemes and
how to avoid them what is a Ponzi scheme
how is it set up a Ponzi scheme is is
basically one person benefiting from
another person and as soon as the first
investor comes in will only be able to
reap a benefit because another investor
comes in afterwards the next investor to
invest their money pays for the first
person that comes out it’s also known as
AI pyramid scheme the first person at
the top of the pyramid makes all the
money that people at the bottom of the
pyramid lose all their money is there
ever a scenario where a Ponzi scheme
might succeed or that it might be a good
investment
a Ponzi is a scam it’s a con the only
way you can make money is if you’ve made
it on the detriment of somebody else so
I would basically say no you should try
to avoid these at all costs no matter if
you get in at the beginning or at the
end what kind of terminology is
important to keep in mind when
discussing this kind of fraud if
everybody knew it was a Ponzi scheme
they wouldn’t be investing in the first
place but terminology that you can
listen to to find out if it will become
or it is a Ponzi scheme is people
guaranteeing something that doesn’t
really make any sense something better
than what makes sense if market rates
are currently running three four percent
somebody promises you 12 or 15 or more
asking you to invest quickly asking you
to put money in in an overseas account
make checks payable to the wrong part
anything that stands out from the normal
you know day to day activity that you
usually see often you ask ask yourself
some extra questions and the more
questions you ask sooner or later
somebody’s gonna sound uncomfortable and
you’re gonna sort of get the idea that
something wrong is going on now in terms
of the Bernie Madoff case which is
obviously a recent example of a Ponzi
scheme how was he able to get away with
this for so long when things are going
well when the markets are going up and
so on and you say I’m going to get you a
10% rate of return it’s really easy to
do when the markets are going up and the
markets are going up and the markets are
going up there’s more and more money
coming in all the time
these Ponzi schemes just get bigger and
bigger and bigger and as soon as the
market goes down
and people started to take their money
out and realize there’s no money left in
the particular scheme the whole
situation falls apart what can we learn
from the Madoff case what signs might
alert us to the fraud some of the
wealthiest people in North America were
invested in obviously overseas at the
same time we’re invested with Bernie
Madoff people came in and said you know
how could it be wrong how could it be a
fraud how could it be anything if these
people are invested obviously there’s
not any risk involved but it just proves
every single time no matter how big or
how small you are you have to ask the
right questions and the right questions
is you know actually safety how safe is
my investment how can I get my capital
out and so on there’s nothing wrong with
asking questions some of the things that
people get caught in is the terminology
gets too complicated the terms all the
the documentation the prospectus is the
research and they say oh somebody must
have looked into it thank you very much
oh my pleasure anything
probably is especially when it comes to
money hi I’m Rebecca Brayton and welcome
to watchmojo.com and today we’ll be
learning more about Ponzi schemes and
how to avoid them what is a Ponzi scheme
how is it set up a Ponzi scheme is is
basically one person benefiting from
another person and as soon as the first
investor comes in will only be able to
reap a benefit because another investor
comes in afterwards the next investor to
invest their money pays for the first
person that comes out it’s also known as
AI pyramid scheme the first person at
the top of the pyramid makes all the
money that people at the bottom of the
pyramid lose all their money is there
ever a scenario where a Ponzi scheme
might succeed or that it might be a good
investment
a Ponzi is a scam it’s a con the only
way you can make money is if you’ve made
it on the detriment of somebody else so
I would basically say no you should try
to avoid these at all costs no matter if
you get in at the beginning or at the
end what kind of terminology is
important to keep in mind when
discussing this kind of fraud if
everybody knew it was a Ponzi scheme
they wouldn’t be investing in the first
place but terminology that you can
listen to to find out if it will become
or it is a Ponzi scheme is people
guaranteeing something that doesn’t
really make any sense something better
than what makes sense if market rates
are currently running three four percent
somebody promises you 12 or 15 or more
asking you to invest quickly asking you
to put money in in an overseas account
make checks payable to the wrong part
anything that stands out from the normal
you know day to day activity that you
usually see often you ask ask yourself
some extra questions and the more
questions you ask sooner or later
somebody’s gonna sound uncomfortable and
you’re gonna sort of get the idea that
something wrong is going on now in terms
of the Bernie Madoff case which is
obviously a recent example of a Ponzi
scheme how was he able to get away with
this for so long when things are going
well when the markets are going up and
so on and you say I’m going to get you a
10% rate of return it’s really easy to
do when the markets are going up and the
markets are going up and the markets are
going up there’s more and more money
coming in all the time
these Ponzi schemes just get bigger and
bigger and bigger and as soon as the
market goes down
and people started to take their money
out and realize there’s no money left in
the particular scheme the whole
situation falls apart what can we learn
from the Madoff case what signs might
alert us to the fraud some of the
wealthiest people in North America were
invested in obviously overseas at the
same time we’re invested with Bernie
Madoff people came in and said you know
how could it be wrong how could it be a
fraud how could it be anything if these
people are invested obviously there’s
not any risk involved but it just proves
every single time no matter how big or
how small you are you have to ask the
right questions and the right questions
is you know actually safety how safe is
my investment how can I get my capital
out and so on there’s nothing wrong with
asking questions some of the things that
people get caught in is the terminology
gets too complicated the terms all the
the documentation the prospectus is the
research and they say oh somebody must
have looked into it thank you very much
oh my pleasure anything
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