How to Read the Red Flags of a Ponzi Scheme

A Ponzi scheme, named after Charles Ponzi, is a scheme of taking your investments and offering huge returns on investments that can not guarantee huge returns.

Difficulty: Moderate

Instructions

Things You'll Need:

• A good lawyer
• A professional investment team.

1. Don't become the victime of a Ponzi Scheme as so many people have. There are red flags to look out for when beginning to invest.
   Potential investors are usually enticed into a Ponzi scheme by being told that their investment will bring in high rates of returns. If you are told that the return rate is much higher than what is shown in the marketplace, then you should question the legitamacy of the offer.

2. When investing, do not be afraid to ask questions. Have as much information as you can written down, and all your questions answered before you make that investment. If for any reason it takes an unusually long time for the investor to get back to you with an answer to your questions, it's time to reconsider.

3. Make sure that you research the investment company. Make sure that the promoter that you are speaking to is checked out thoroughly. Do background checks if you are dealing with a large sum of money.
   Other things to look for are vague information, or little information on the company website. If the company you are interested in investing in has generic information like Yahoo or Gmail email addresses instead of professional domains, then it's time to look elsewhere.

Tips & Warnings

• If your promoter continuously asks you to put in more money to these same companies with promises of larger than normal returns, then you may be in a Ponzi Scheme.

[missnye]

on 11/25/2009 Never trust a salesman, or any man, for that matter, who winks at you!*****

[sallyemaycreate]

on 10/5/2009 Thank you for the valuable information on how to read the red flags of a Ponzi scheme. Your tips are very thorough and helpful. 5*

[jenng]

on 10/4/2009 Great article on How to Read the Red Flags of a Ponzi Scheme 5*

[pennynickols]

on 10/4/2009 Thanks for sharing, "How to Read the Red Flags of a Ponzi Scheme." Regardless of the amount of money you have to invest, there are reputable and time-tested invested companies that will manage your money responsibly based on your risk tolerance and years before you need the cash.

[saucywriter]

on 10/4/2009 Excellent advice on avoiding getting caught in a Ponzi Scheme. To Step 2, I would add, run like fire when you hear, "Trust me." ;-) 5*