“$16m Goldsky fund ‘Ponzi Scheme’ ensnares high-profile sports stars” – this was the headline of the weekend Courier Mail.
What it is about us that makes us risk our hard-earned cash when someone sells us a good story?
There have been any number of so-called Ponzi schemes uncovered over the years and we haven’t seen the last of them. A Ponzi scheme is a type of fraud that pays profits to its investors from funds invested by newer investors. The ‘success’ of a Ponzi scheme relies on a continued flow of funds into the scheme and little in the way of withdrawal requests. There is often no underlying investment made in spite of the reporting that is provided to investors.
These schemes are usually operated by people who excel at sales, people with the gift of the gab and a great personality, who are able to convince people to invest with them and then convince the investors that the investment is performing outstandingly well – until it crashes. Someone eventually twigs that things aren’t as they should be, with the result that a lot of people lose a lot of money.
Why would anyone invest in one of these things, or at least invest in something that could be less than what it purports to be?
We are suckers for the ‘get rich quick’ type of line that these operators will use and that level of greed will make us – for greed is what it is, will make us take the risk.
A simple portfolio of good quality ASX-listed shares that will appreciate over time and produce a sustainable income just doesn’t cut it when compared to the promises made by our dodgy operators.
Remember the old fable about the tortoise and the hare? This is equally true of investing. Here at The Investment Collective, we subscribe to the theory that a properly constructed portfolio of shares, fixed interest and International managed funds will achieve your objectives over time – safely. This type of portfolio will also give you transparency so that you know what you own, you know what you are invested in and you know the type of income that it will generate for you.
Why would anyone think that the ‘get rich quick brigade’ have a better idea?
Call The Investment Collective if you would like further information on how to invest safely and transparently.
Please note this article provides general advice, it has not taken your personal or financial circumstances into consideration. If you would like more tailored financial advice, please contact us today.