TANA-NOMICS: Traditional Sou Sou vs Ponzi Schemes
Amid all the brouhaha surrounding GET GXL and the proliferation of numerous other shady "investment" vehicles, I realized people still don't know the difference between them, which are legal and illegal and how to spot a "smartman" trying to sell you the air in a corn curls pack. So hopefully this post helps someone out:
A traditional Sou Sou, the one we grow up seeing our parents and grandparents use, is perfectly 100% legal. What's illegal is Ponzi and Pyramid schemes that people call a Sou Sou. There's a huge difference.
A Sou Sou is a savings arrangement where a group of people each pool an equal amount of money for a period time (month, two weeks, etc) and each period one person in the group gets the pool of money called a "hand". So yes, all these years Iwer singing about he Sou Sou money.
Anyway, they keep doing this till everyone gets their turn and receives a hand at least once. Ironically the person who collects the funds and makes the disbursements is called the "bank". A traditional Sou Sou is not a Ponzi or Pyramid scheme as there is no promise of a return in excess of what you put in. There is no requirement to recruit others and no one loses as long as everyone is trustworthy and puts in their share. I still don't like them for reasons I've outlined in great detail in a previous post.
A Ponzi scheme, named after the ultimate smartman swindler Charles Ponzi (probably had Trini roots) is a bobol "investment" scam promising high rates of return with little risk to "investors". Basically the scheme works by taking the money from new investors to pay old investors. Now if you said to yourself "self, how is that different from the NIB taking current workers money to pay retired workers?"...well I couldn't really answer that other than to say "because the government say so".
Now a Pyramid scheme is similar to a Ponzi scheme in that the returns to older investors (think line 5 or 6) are paid with the funds from new investors (think line 1). Where both schemes come crashing down is when there aren't enough new investors to keep the bobol going.
So now we know the differences what should you be looking for to keep your little kakada safe..."because small money is better than no money" - TANA say so.
Well the first red flag is anything that promises an unusually high return for very little or no risk. Interest is the price of risk, so if someone is promising you a risk-free return of 120% per month and you're not running drugs then something is very wrong.
The next thing to look out for is whether the emphasis is on you recruiting other people rather than on selling a legitimate product. Because there are legitimate multi level marketing companies that sell actual products and have proper pay structures.
Also, if the persons involved cannot explain clearly how the company is making money and where the value is coming from then that is a huge red flag. That goes for all investments actually. Never invest in anything you don't understand.
Some other ways to spot a scam is by just reviewing their website, looking them up on the companies registry or even just take five minutes and ask aunty Google "is cousin Cheryl trying to encourage me into a scam".
Finally, always remember that any investment is required by law to be registered with the TTSEC, so if you're in doubt why not reach out to them.
In conclusion, if you absolutely feel the need to piss away your money and want somebody to advantage yuh, then look no further. I go provide my bank info for you to send the cash. I go use it to fete and buy gin.
TANA