Mama I’m gonna be rich – Ponzi Scheme or legitimate income?

Over the last few days, I have been inundated with calls and requests to attend or join a new ‘Wealth Creation’ platform. With years of experience in the world of finance, I make sure that whatever investment gets my money has gone through layers and layers of research and understanding. So, as usual I set out to research this whole new money making venture and within two minutes of hearing about it, I didn’t need to hear more, it was what it was, a Ponzi Scheme!!

According to Wikipedia, a Ponzi scheme is a fraudulent investment operation where the operator generates returns for older investors through revenue paid by new investors, rather than from legitimate business activities. Operators of Ponzi schemes can be either individuals or corporations, and grab the attention of new investors by offering short-term returns that are either abnormally high or unusually consistent.
 
I first became aware of Ponzi schemes in Nigeria when I first moved back and heard of schemes such as wealth solution and club freedom, then there was Nospecto, to name a few, and very recently, MMM. Whilst MMM investors are still basking in the loss of their investments – with people literally committing suicide due to the loss – and our nation in general still dealing with the results of its crash, it came as a complete shock that in less than a year, Nigerians are actively involved in another!

True to form, people – enlightened, exposed, educated, religious and non-religious etc.- are actually falling for it and justifying it as a legitimate income generator! This recent product is called Swiss Golden, and according to information available on its website, is the investment or purchase and sale of gold bars. The idea behind it as they claim, is that you can purchase gold bars (anywhere from 1 – 100grams) and can either choose for your gold bars to be shipped to you, or kept in a depository.

There is a catch for Nigerian Swiss Golden investors though; his they say is the limit to how much gold can come into Nigeria (max of 10- 15 grams). Nigerian investors are required to provide an alternative address anywhere in Europe to have their gold bars shipped to or be left with the option of storing their gold bars in a depository of special metals. As stated in their website, either option attracts a fee of 55 Euro for delivery or a 0.1% gold storage cost per month of the value of the gold. I’m guessing that most Nigerians will choose option B.
 
Sounds great doesn’t it? But here’s the thing, SwissGolden operates an investor referral tactic, which requires new investors to donate into the matrix system and earn more money for bringing more people. Again according to their website, the more people one refers, the more money there is to make (This is often referred to as a multi-level marketing or a pyramid structure)

It is important to note that the inverted pyramid crashes the minute the flow stops and people begin to demand for their money or in this case their GOLD. Let’s test this SwissGolden scheme shall we? Let everyone that has invested in it ask for their Gold or money within the next 2 weeks and watch all hell break loose.

Why do you even think you need SwissGolden?
In the midst of recession, there are many businesses calling for your attention and so it becomes very important which one you should fall for. BEWARE! How is Swiss Golden trying to lure you to their scheme? They say that they stand out among others as follows:

– Zero percent risk! SwissGolden is the only MLM that will REFUND your money if you are no longer interested. Every other MLM will tell you that money paid are not refundable and that understandably so because their matrix will collapse if they should refund you. SwissGolden’s matrix system is dynamic and not static. 

– The minimum you earn from SwissGolden is N1.1million naira (One million, one hundred naira only) and you earn that 3 times before you move to the next stage with even more money to be earned. 

– SwissGolden operates in Gold and euros. If you must survive in this recession, you need to earn in foreign currency. Euros is even more valuable than dollars. 

– Excellent matrix system. Most MLM will tell you they operate a 2 x 2 matrix. When you join, you find out that they have other stages that operate a 2 x 3 or even 2 x 5 matrix making you to struggle to earn from their system. They are death traps. SwissGolden operates a 2 x 2 matrix all through their wealth stages.
 
This, my dear friend is really just grammar to confuse you. There is no proof that they will indeed give you a refund once you call for your money, nor is there any actual proof that they are indeed linked to a gold trading platform. They even tell you exactly what the minimum you can earn is. I guess this means that they are fully in charge of the commodities market and can control the price of gold right?
 
I say this boldly, any investment where recruitment is the main focus and not product sales is a SCAM!! SwissGolden is not creating wealth for you, it is simply asking you to scam your family and friends and also lose money when it crashes.
 
According to the website, you can start the SwissGolden from as low as € 75 – €9800 i.e. NGN 31,500 to NGN 4,116,000. Another source revealed that the current ‘entry’ fee into this scheme is N1, 600,000 (It may have gone up at the time of publishing this article).

THE WAY FORWARD – Investing the Right Way
I have listed two ways you can safely invest this amount in Nigeria today without the fear of losing your hard earned money.

1) Treasury Bills
Treasury Bills are short-term debt instruments issued by the Federal Government to provide short term funding for the government, and are usually issued for tenors of 91 days, 182 days and 364 days at the primary market auction. However, there is an active secondary market which means you can pretty much buy T-Bills at other tenors at any time. Rates currently range from 13 – 18%. Best way to invest is to contact your bank either to bid on your behalf on auction days (currently every Thursday) or to buy for you on the secondary market; your bank will let you know what you need. 

2) Money Market Funds
Money Market Funds are open ended mutual funds that invest in money market securities such as Treasury Bills, Commercial Papers, Bankers Acceptances and Certificate of Deposits issued by rated banks in Nigeria.

Minimum investments begins from N5,000 for most funds and you can invest as often as you want, again, this is a relatively safe investment as the underlying securities are mostly short term instruments with low risks. One of Nigeria’s leading Banks currently has a Money Market Fund yield of 18.56% (As at the time of writing this article). Your bank or a financial advisor can point you in the right direction of the best performing funds.

Dr Seun Akinbohun (PhD) is a faculty member at the Olusola Lanre Coaching Academy. A certified Life, Family and Finance Coach (LFFC), Seun is also a member of the Life Coaches Association of Nigeria. Follow The Catalyst, Lanre Olusola on social media @lanreolusola. To book a Finance Coaching Session now, email info@olcang.com or call 08077077000