MyMoney Online

Ponzi Schemes thrive in an ailing economy…

You get the sense that the increasing number of Ponzi Schemes (especially the latest MMM) mushrooming in South Africa is directly related to the financial pressures that are induced by our ailing economy. When there are large numbers of people struggling to make ends meet they become easy prey for the vultures circling them who take full advantage of the situation by promising outrageous returns which are nothing but lies and deception.

Robbing Peter to pay Paul A Ponzi

Scheme pays returns to early investors using capital from investors who join the scheme at a later stage. For example, you are promised a return of 20% per month on your investment of R10 000. At the end of the month your receive R2000 and you are so delighted that you tell family and friends. After all, you made a great investment decision, right? Meanwhile the scheme used your money to fund other investor returns giving you the idea that your R10 000 was invested for the next return. Now as your friends dive into the scheme their funds are used pay the R20% due to the existing investors including you. When you do the permutations, the scheme is destined to implode as the numbers of new investors required to prop up the existing ones simply run out.

Don’t get caught

Don’t get lulled into a ‘get rich quick’ promise. Sure, the higher the return you seek should be relative to higher risk but there are limits. When a guarantee is thrown in become suspicious. Spectacular guaranteed returns are too good to be true. Check if the organisation is licensed with the Financial Services Board as a Financial Services Provider. If it is then it will have a Licence Number. This is no guarantee, but at least you have some idea that the company has been approved. Ponzi Schemes can bye-pass the regulatory environment, so if no number then there is a reason to be more careful. Check out the company. Where is it based? How long has it been in business? What assets, products or services are they in the business of?

Get a second opinion. Ask a reputable financial advisor for advice. An experienced advisor will not be enticed by spectacular promises as he will understand that wealth is created over time. If the offer is extraordinary a good advisor will see the pitfalls.

For more information, listen to Paul Roelofse speaking to Sam and Africa on Weekend Breakfast below...

Read more from Paul Roelofse at www.investforlife.co.za

702 welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

  • Racism (including offensive comments based on ethnicity and nationality)
  • Sexism
  • Homophobia
  • Religious intolerance
  • Cyber bullying
  • Hate speech
  • Derogatory language
  • Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the 702 community a safe and welcoming space for all.

702 reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

702 is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

Read More
Single best JSE investment right now (by First Avenue Investment Management)

Single best JSE investment right now (by First Avenue Investment Management)

You should make lots of money (while you sleep!) if you invest in this company suggested by Investment Analyst Nadim Mohamed.

Unmarried, but living together? Here’s how to arrange your finances…

Unmarried, but living together? Here’s how to arrange your finances…

Bruce Whitfield interviews Galileo Capital Personal Financial Advisor Warren Ingram for his weekly personal finance feature.

2 best investments on the JSE right now (by Nedbank Private Wealth)

2 best investments on the JSE right now (by Nedbank Private Wealth)

Looking for a hot investment tip, or two? Bruce Whitfield interviews Nedbank Private Wealth Portfolio Manager Warren Jeffery.

3 wealth creating shares you should buy (by Aluwani Capital Partners)

3 wealth creating shares you should buy (by Aluwani Capital Partners)

Looking for a hot tip, or three? Bruce Whitfield interviews Aluwani Capital Partners Head of Equities Patrick Mathidi.

How to teach children the value of money

How to teach children the value of money

The Money Show’s Bruce Whitfield interviews Galileo Capital Personal Financial Advisor Warren Ingram.

Credit bureaus are watching you; judging your every move

Credit bureaus are watching you; judging your every move

They’re judging you; even if you don’t know they exist. The Credit Regulator’s Alison Magrath discusses credit profiles.

Popular articles
Molefe should reject MP offer (if he stands for excellence)- Eusebius McKaiser

Molefe should reject MP offer (if he stands for excellence)- Eusebius McKaiser

Eusebius McKaiser says if Brian Molefe accepts the offer it would reinforce the idea that he has been a wolf in sheep's clothing.

7 inexcusable reasons why people don't use condoms (when they should)

7 inexcusable reasons why people don't use condoms (when they should)

Dr. Eve explains the importance of condom usage and educates people about the transmission of sexually transmitted infections.

LISTEN: Tropical storm Dineo wreaks havoc and claims lives in Mozambique

LISTEN: Tropical storm Dineo wreaks havoc and claims lives in Mozambique

SA Weather Service says Dineo is expected to affect Limpopo, Mpumalanga and northern KZN.

KZN ANC calls for scrapping of provinces

KZN ANC calls for scrapping of provinces

The African National Congress (ANC) in KwaZulu Natal wants the provinces system scrapped and Cosatu backs this call.

Ex-cyclone Dineo to hit Limpopo, Mpumalanga overnight - SA Weather Service

Ex-cyclone Dineo to hit Limpopo, Mpumalanga overnight - SA Weather Service

Despite the downgrade, residents in parts of Limpopo and Mpumalanga can still expect flooding and heavy rains.

Why the iconic Nokia 3310 is so appealing (and making a comeback!)

Why the iconic Nokia 3310 is so appealing (and making a comeback!)

The most resilient and reliable phone ever made is making a comeback and some are saying it's long overdue. Here's why.

I have suffered backlash from white people (and black people) - Kasi Mlungu

I have suffered backlash from white people (and black people) - Kasi Mlungu

Anita Ronge, famously known as Kasi Mlungu, talks music career, race and township lifestyle with Eusebius McKaiser.

100 scholarships up for grabs to deserving students

100 scholarships up for grabs to deserving students

Together, the SA and Hungarian governments are offering scholarships for students who want to do bachelor, masters, and PhD degrees.