If you have been thinking about investment for some time and have already delved into the information about the opportunities available to modern investors, you have probably come across financial pyramids. These are particularly dangerous fraudulent companies which you should be aware of.
This article will provide you will all of the necessary information required for distinguishing such financial entities on the market.
Financial pyramids: the forms of investment promising particularly high income
One of the greatest problems about investment is the fact people would like to generate great profits as soon as possible while it is usually connected to some risky strategies which usually end up in losing money. One of the most obvious ways to get rid of your savings without generating any profits is investing into the options which are offering people particularly high income.
Needless to say, many individuals will be attracted to such investing options especially since their creators love using psychological tricks as well as logical explanations of the unfair way in which the modern world is existing with all of the banks collecting the money from people for their own needs while this money could have worked a way better and everyone could be rich. Indeed, this sounds like a perfect plan and you might feel very enthusiastic coming across such possibilities.
Unfortunately, in the reality any investment option which will provide you with extremely high income is using a very unstable strategy. In the reality, it is paying money to the members of such a company who have been in it for a longer time using the money of its new members. You can imagine, this cannot work in such a way forever and the day when there is either no new members or all of the members want to pay their money out will lead to the complete destruction for the structure.
It might seem that the members who have been in the company for a longer time will have higher chances of receiving their earnings in such a situation of a crisis, however, there is no guarantee it will happen. In many situations, people just lose all of their money. One might receive the information about having generated a gigantic profit if he or she happens to be at the top of such a financial pyramid, however, it might be simply impossible for this person pay this money out. As you can imagine, the major risk is in the fact your own money which you have used as the initial fuds for investment will be lost as well.
Multilevel marketing based on a financial pyramid
You have just learnt about the investment plans which are offering large income and what is the catch behind them. Fortunately, many modern people might find such options suspicious from the very beginning and not go for such investments plans. Needless to say, scammers are trying to create more inventive forms of investment so that their fraudulent intentions will not be thus obvious.
One of the common ways such things are achieved nowadays is with the help of multilevel marketing.
As you can imagine, one of the problems here is the fact it might really make many people confused especially if they have already used the services of some multilevel companies or might even be working for them.
The problem is that multilevel companies are not necessarily fraudulent and there are indeed a number of companies which have been functioning in such a way for decades and have a lot of loyal customers. As you can imagine, the idea of such companies is selling goods which are available only through some specific ways of distribution which require attention from the side of the specialists of such a company. This creates a feeling of purchasing unique goods which are not available anywhere which makes them attractive, however, for the real multilevel companies affordable and sensible prices are also typical unlike it is in the case of multilevel companies which are trying to deceive their customers.
Such scamming companies only pretend to generate income with the help of selling some goods which in the reality, they need to attract more and more people into the company for profit. You might be wondering what is the exact way they can earn money.
A common scheme is to sell some goods which have a very small real value while the price for them in such companies is extremely high. Unfortunately, some unfair companies will not even deliver their goods to the customers. Of course, in such a case one just pays for some good and this is the exact income of a company. As you can imagine, the variety of products sold in such a way can be very wide. It is also possible to get into a pyramid which has some hidden expenses for the participants which actually generate the profits for its owners.