Investment Scam – DIY (Do It Yourself)!

Hey, if you are wondering which is the most profitable business, I can tell you without any doubt, it is Investment Scam.  Yes, you heard it right.  Nothing can be as profitable as ‘cheating people’! So, if you want to try, here are some useful tips.  

• Start a Finance Company and give it a catchy name.  Set up a fancy office (take it on lease or rent, but pretend it to be the company’s own)

• Start an investment scheme offering exorbitantly high rate of interest (for example, 4% per month, which amounts to 48% per annum)

• Create as much publicity as possible.  Create an image as if you have a variety of businesses and you are stingy rich.  This will instill a lot of confidence in the investors, because they would believe that even if the investment scheme does not work, you have enough assets to repay their money.  The more flamboyant your life is, more is the confidence the investors have in you!  Appear in media and give sermons. Always promise to protect your deposit holders at any cost.

• Now the money game starts.  To begin with, assume 10 people invest Rs.1 lakh each for three years in your scheme.  You have Rs.10 lakhs in your pocket.  Pay 4% (Rs.40,000) towards interest in the first month.  Continue to pay the interest every month promptly for few more months.  

• As the saying goes, ‘the proof of pudding is in eating’, when you pay the interest promptly, the investors’ confidence will skyrocket.  Now, they will become your brand ambassadors and bring more investors to you.

• In one year, even if you get only Rs.10 lakhs as deposit, the money required to pay interest is Rs.4.80 lakhs.  The remaining Rs.5.20 lakhs are all yours!  Imagine what happens when more money flows in.  In fact, what you are doing is just rotating the money – collect from A and pay B, collect from B to pay C, collect from D to pay C and so on.  Your success depends on how efficiently you manage this flow.

• At the end of three years, when the deposit made by the first set of investors becomes due, if you are lucky, you would have collected enough money from others to repay them.  But this cannot go on for long.  So, you need to envisage a day when your scheme bursts.  When the scheme is running, it is better to keep an escape plan ready.  When it bursts, abscond.  If you are lucky, you can avoid the police. Otherwise, be ready to spend a few days in jail, till you get bail.  Anyway, the case will go on for a long time, the public and media will forget your case, and the investors will be fed up fighting.  You can live on!

What is your investment in this business? Almost nothing.  The returns are very high.  Yes, as they teach you in Finance, you need to take risks, rather high risk!

(The above write up is satirical, but unfortunately, this is the modus operandi of most of the scamsters.  No, I don’t have the experience of running such a scheme.  But I have been reading about investment scams since my college days. If you think only uneducated people get trapped by the scamsters, you are wrong.  Everyone is attracted towards high rate of returns promised by them, because ‘greed’ has no color, sex, religion, or class – all are greedy!  So, people forget one simple Economic principle that if someone offers 48% interest per annum, he/she should be able to invest the money somewhere else and generate more than 48% to sustain the scheme.  Common sense is enough to realise that it is not possible to generate such rates of returns consistently from any business.  So, next time you come across any scheme that offers rates of returns far above the rates prevalent in the economy, just ignore them or be prepared to lose your hard-earned money)