Give 5000 and we will give you back 50,000 after a year!!!!

This is what lures people to invest in these scammed companies. I personally have seen many such companies, and people investing in them.

What makes people to invest in these fraud schemes?

One can easily make out that the offer given is doubtful and people without enquiring the source of return and nature of business simply invest in these schemes.

The trending Sharada scam is just tip of iceberg. There are thousands of scams which still to be unearthed.

Why people invest in these schemes, what makes them to invest and how one can ignore it?

Posted 5 years, 8 months ago by Rahul Rai

India is still developing and very nature of Indian system is damage management and not prevention.

India is a country with huge population, so, we cannot blame only government but even public is not financial literate.

Why people are lured in these schemes:

  1. Take example of MLM companies, how they work! You must have received call from their executives etc... Mostly people become member of these schemes because their friends or relatives are member. It’s a chain reaction.
  2. Greed, why one will not take a chance with a small amount of 5000 to earn 50,000?
  3. Not understanding what they are doing!!!
  4. Culture, yes Indians by nature are soft target if marketed well. Suite and Ties can do wonders.
  5. Majority of population does not understand economics and financial illiterates.

How this can be prevented:

  1. Investing is not bad, but first you have to understand the nature of business and whether business is able to give such high returns.
  2. Is company registered and have valid license to collect money. Private limited companies in India, cannot borrow money from company without issuing shares.
  3. Chit fund companies can never multiply your money such a short time. Interest rate charged on borrowings is not 100%
  4. Understanding the investment and returns achievable in current economic situation.
  5. Think and think again, if even a small doubt comes, don’t invest.

And avoid these messages

Posted 5 years, 8 months ago by CA Pulkit Sharma

Your Reply:

You need to be logged in to reply.