• Julien Demaret

Invest in this opportunity. 10% ROI per month guaranteed.

Sounds too good to be true, right?

Photo by Michael Förtsch on Unsplash This morning while waiting for my flight at Suvarnabhumi International Airport, Bangkok, Thailand, I came across a bunch of different articles here on Medium, promoting investments with attractive yields and low risks. Well at least, this is what it was written. Lucky us, my flight is delayed, I have some time to write about this. I have been noticing a big increase in “investment opportunities” in the last couple of years. I guess it is mainly due to Covid lockdowns that made people consider building an online income. It is also due to the increased popularity of cryptocurrencies that allow anyone to send and receive money in a way that was not possible before. While this may be a very useful technology, it has some misusing too. Scams and Ponzi schemes are growing like mushrooms in the forest, every day new ones are born and others are revealed. I have myself in the past invested in some of them, I was lucky enough to earn some money in some cases, and not lose too much in other cases. More importantly, it allowed me to gather some experience that I’m going to share with you today. So here is my list of common red flags that categorize a Ponzi scheme, or a scam, in 2022 :

  • It works by affiliation and the person who refers you gets a percentage of your investment. This is the simplest method to try to have momentum and more people and money coming in than people and money asking for withdrawals.

  • The company providing the opportunity or service is not registered/ registered somewhere with no regulations/registered for another purpose than investment. To receive investments from customers, and to manage funds on behalf of someone, a company has to be accredited. In many cases, the companies that are providing these types of scams are recently incorporated, in places that do not require any control and accreditations to manage investment activities. They are even sometimes claiming there is a good reason for that, this is what allows them to provide such high yields of profit, whereas it wouldn’t be possible if they were regulated, they would have to operate less aggressively. They always have a good explanation for everything.

  • You have to send your investment to that company, most of the time using a crypto transaction. You are not in possession of your investment. This is important to understand. When you send your money to some obscure address on the blockchain, the risk of this money being simply stolen is high. And there is nothing you can do about that.

  • The initial investment is lost and only the profits are available for withdrawal. This point is good evidence also. In a legit investment, there is no reason to make you lose your capital and receive only the profits. The reason they do that is simple, it allows them to create the illusion that payments are being done successfully for a period of time, using your deposits to pay others daily profit. This is how a Ponzi work.

  • A lot of people are promoting it on the internet, social media, youtube, Medium, and elsewhere, while a whole lot of people are writing articles to announce it’s a scam or to discuss its legitimacy. There is no smoke without fire right? Reviews online are not always to be trusted, but when there are big arguments about the legitimacy of a company, that most of the time oppose believers against fact-checkers, you better run.

  • Future earnings are fixed and pre-announced. It is NOT POSSIBLE to guarantee future earnings. Investing involves risk. No one knows the future, otherwise, everyone would be rich. Most of the time the communication is trying to reduce your perception of the risks involved or even guaranteeing your investment or ROIs.

  • The company might be network marketing-based or multi-level marketing based. While the network marketing model by itself is not the problem, it can be when associated with investment opportunities. Unlimited levels of affiliated commissions have to be paid with your investment, not even leaving some money to pretend something is done with it.

  • There is no contract. No contract, no liability. No official documents to prove any business transaction.

  • There is no verifiable wealth creation. This is a major point. The company is claiming to do trading? Do you have access to trading data? It is operating masternodes? Can you verify it on the blockchain? Can you go and visit their facilities? Are you able to check their physical address? Most of the time, it is very hard to find.

If one or more of the points above are true for the investment you’re considering, please increase your amount of research and do not just invest based on emotion or because you trust the person who talked to you about it. Investing is not an easy thing. There is no magic recipe or golden lottery ticket. If it seems too good to be true, it is because it’s a scam. Do not let your fear of missing the opportunity pollute your logical thinking. So now that I have given you the red flags for not legit investing, Let’s look at the good signs of a legit company and opportunity:

  • Future results are never suggested or fixed or guaranteed. Instead, past results are explained and given to allow you to have an idea of what you may expect, but nothing is certain.

  • Disclaimers are used all the time such as: Invest only money that you can afford to lose, past results do not guarantee future results, investing is risky,…

  • There is no network marketing operating structure around the opportunity. Maybe someone can have a referral commission to facilitate and put you in contact with the company that is searching for investors. But not on multiple levels.

  • The company is registered, empowered to offer investment or dispose of your capital, and is regulated by the financial authority of the country it is based in. For example the Security and Exchange Commission (SEC) for the US, or the AMF for France. Registered regulated companies are audited regularly and have to show good conduct in any area of their business. That does not guarantee that they will make you earn money, but at least, you will not be scammed.

  • There is a contract that states clearly all the details of the cooperation: Date and amount invested, when the money is coming back, how much interest is earned ( in case of landing to a company for example), what is happening if there is a delay, and for what purpose the money is going to be used.

  • You can verify the wealth creation. In case you are doing private equity for example, or obligations, there is a strong business plan. If you are going on the stock market, your money is deposited in a regulated broker and you can check historical data. This point might not be easy to verify. But if all the other good signs are here, you can consider the opportunity seriously.

Final thoughts Risk / Reward ratio Be conscious that high interests always come with high risks. A company offering 10% per month as in my title, and saying that it is low risk, is lying to you. Investment risks and professional scammers. The risks of investing are not about risking to be scammed, it’s about risking to lose your money to make profits. Sometimes the investment is not profitable and the company fails to return the capital or profits, but it is not made intentionally. Some people out there may tell you it’s part of the investment risks to be scammed, it’s not. Some people are professionals in promoting and building scams and network marketing companies. Beware of this. Only the ones that are doing affiliation and making people invest instead of themselves might profit from these scams. Educate yourself. If you want to invest smartly and make profits in the long term, you have to educate yourself. This is the only way to control the risks and make profits consistently over time. I hope this helps. Now I have to go, my plane is about to take off. Bye for now.

Disclaimer: I’m not a financial advisor. This post is here for educational purposes. If you want to educate yourself financially, I can help you.

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