I’ve seen a lot of illegal Ponzi pyramid schemes in my time and generally find them very easy to spot however, one thing that really irritates me is when promoters (who almost always know they are promoting an illegal, fraudulent scheme) say “never invest more than you can afford to lose”.
On the surface this seems very sound advice. But it’s fraught with problems and very often the only real reason someone is offering this advice is to cover their own backs in case you lose your money.
So what’s the problem with this advice?
Firstly, it encourages people to take a punt rather than spend the time and effort doing proper research. In other words, the investment is not an investment at all but rather a gamble or bet. Depending on your view point that may still be fine but, this brings me on to the second reason why this is such poor advice.
You could actually be funding criminal activity such as paedophilia or terrorism. Our natural human reaction is to think “no way, I wouldn’t do that” but I’m afraid to say, it could very easily be true.
By handing over your hard earned cash on the promises of quick, easy riches, you could very easily funding criminal activity. There’s no way you would put money in the bucket of someone in the street sayying “help the murderers”? And yet, by putting money into a “get rich quick scheme” you could actually be doing just that.
Don’t believe me? There’s a real case where a mass murderer was funded by lots of people investing in an illegal ponzi scheme called Bitconnect.
Brenton Harrison Tarrant, was a lone gunman armed with semi-automatic weapons, when he attacked Muslims attending Friday prayers in Christchurch on New Zealand’s South Island on March 15 2019, killing 51 people in the country’s worst peace-time mass shooting. The attacker broadcast the shooting live on Facebook.
The killer attributed being able fund his activities thanks in part to the money he had gained from the illegal ponzi scheme BitConnect. (here)
There’s another case…
The illegal Ponzi scheme, Traffic Monsoon, was operated by Charles Scoville. In a separate legal case to the charges of fraud, Charles Scoville pled guilty to 1 count of First Degree Felony Attempted Aggravated Sexual Abuse of a child.
So next time you are tempted to “invest” in something that seems too good to be true, please understand that “only invest what you can afford to lose” is certainly not a valid reason to make an investment!
In short, when investing, you should only ever invest based on the merits of the investment itself, and not on how much money you might lose.
ALWAYS do your research and hopefully we can stop funding criminals.