Getty Images1) A Ponzi scheme is a fraudulent investment scheme with the intention 1of duping.
2) It offers high returns at low risk to gullible investors.
3) Ponzi fund investors give money to a portfolio manager who pays them back from the incoming funds contributed by newer investors.
4) The new investor funds are used to pay the earlier investor.
5) The crux of this scheme is getting a constant inflow of new investors and when there are no more new ones, the scheme falls apart.
(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)
2) It offers high returns at low risk to gullible investors.
3) Ponzi fund investors give money to a portfolio manager who pays them back from the incoming funds contributed by newer investors.
4) The new investor funds are used to pay the earlier investor.
5) The crux of this scheme is getting a constant inflow of new investors and when there are no more new ones, the scheme falls apart.
(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
Read More News on
(Your legal guide on estate planning, inheritance, will and more.
...moreHow to save tax for FY 2020-21.)
Download The Economic Times News App to get Daily Market Updates & Live Business News.
