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The Ponzi Scheme. Returns from nowhere.
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Money SenseGL-00016
The Ponzi Scheme
Returns from nowhere
A fake investment that pays old investors with new investors' money.
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The first investors always get paid. That is the bait. They tell friends, who tell friends. The pool grows. But no business generates the promised returns. New investors' money flows to old investors. When new money slows, the structure collapses. The maths guarantees it.
- The Saradha scam in India (2013) took about 2,500 crore rupees from millions of depositors.
- If anyone promises returns above the bank rate with no risk, ask one question: where does the money come from?
SourceSEC documentation on Ponzi structures
Saradha scam, Enforcement Directorate case files
Saradha scam, Enforcement Directorate case files
Keep exploring
Because you read The Ponzi Scheme.
Money SenseGL-00005
Need vs Want
The one-question filter
A need keeps life working; a want makes it nicer.
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Money SenseGL-00006
Compound Interest
The snowball that keeps growing
Interest that earns interest, so growth speeds up over time.
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Money SenseGL-00007
The SIP
Small bets, long game
A fixed amount put into an investment on the same day every month.
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