Ponzi schemes thrive on enticing returns, drawing in new investors to fund payouts for earlier ones. This deceptive cycle ultimately leads to collapse when recruitment falters, leaving participants with substantial losses. Awareness is key to prevention.
The Ponzi scheme, named after Charles Ponzi, tricks investors by promising high returns with little risk. This overview demystifies its mechanics, explores historical examples, and highlights red flags to help individuals recognize and avoid financial scams.
Ponzi schemes lure investors with the promise of high returns, relying on new participants’ funds to pay earlier investors. This exploitative model collapses when recruitment slows, leaving many with significant losses. Understanding its mechanics is crucial for protection.