By now, we’re used to seeing adverts about “this one trick that makes you $1,000 a day.” Most of the time these adverts are harmless enough. But often, they are an attempt to fraudulently acquire your cash. Most people are getting savvy about this and just ignore it.
Now the confidence artists are trying more subtle ways to manipulate you and get at your money. As a result, it’s more important than ever that we become educated about the schemes that are out there. And how they can potentially derail your family’s finances.
Thanks to the advent of better communication and viral marketing, pyramid schemes are still going strong. Despite the infamous example of Charles Ponzi, who conned investors out of $20 million dollars in the 1920s, schemes still exist.
Pyramid schemes rely on continuously generating new business to support the returns for people further up the chain. Early investors often see a significant return as they drag more and more people into the pyramid. The only way for the pyramid to survive is if more people are added to the bottom rungs. However, the rate at which they need to be added to keep the operation solvent grows exponentially. Eventually, for the scheme to survive, more people need to come in than are on the face of the Earth.
Pyramid schemes, therefore, end up collapsing under their own weight and those who were further down the chain end up losing all of their money. If you see a scheme that promises you amazing returns if you sell a product to a group of people who then sell on themselves, be wary. It might be a scam.
Robot Options Scam
Recently we have seen the rise of the binary options robots scam. Binary options robots are automated programs that place option calls for investors on their behalf. Usually, they go about their business, buying and selling options, and hopefully making you some money in the meantime.
However, many robot options brokers are liberal with the truth when it comes to what kind of returns a robot options program can attain. If you see promises of 40 percent returns in a couple of months, don’t get involved. Yes, robots can do remarkable things, but they still can’t predict the future or guarantee returns on your investment.
When the price of precious metals was booming in the 2000s, we saw the rise of something called exchange traded funds. ETFs were certificates that said that you owned a fixed amount of gold, silver or other precious metal.
However, there was nothing to stop scammers doing what banks do. They had a small amount of gold but sold more gold than they had by selling paper derivatives. They knew that not all people that bought ETFs would demand to see the physical gold. So the incentive was to keep issuing more ETFs to make as much money as possible.
If you want to buy bullion, buy the real stuff and hold it in a vault. Don;t play games with ETFs or other precious metal derivatives.