Beware “Gifting” Programs

Do you know what a Ponzi scheme is?

In short, it’s a plan that entices people to pay large sums of money on the promise of huge returns.

A few years back, some major charities were involved in such a scheme because they were told that a new “investment program” promised HUGE and SAFE returns.

Given that even large colleges were duped, it’s pretty obvious that even people with Ph.D.’s for for sucker pitches. They assume they’re so smart that they can’t be fooled. But their greed entices them.

There are no HUGE and SAFE returns in investment markets because, by definition, the market price in a free market is a result of the flow of publically available data in the market. Huge discrepancies only occur when data is not commonly available - such as the illegal practice of “insider trading”.

But greed overcomes reason and the promise of HUGE and SAFE returns lures people.

The first few people get a check back right away and then refer all their friends so that they can get HUGE and SAFE returns.

But since there’s no investment really, it’s just money shuffling and if new suckers aren’t lured in, the whole things collapses.

Gifting programs are a variation of this.

They try to remain legal because - until the government began penalizing seniors for charitable contributions - nobody had outlawed giving a gift.

Gifting programs studiously avoid “investment terms” to try to stay legal.

But to remain legal, all gifts must be voluntary.

There can be no expectation of gain in return… no quid pro quo

But really, who joins a gifting plan without expecting to get huge sums of money?

Nobody.

If people just want the good feeling of giving, they can give to the Salvation Army, a church or even a hobo in the street.

Gifting programs lure people who want to give something in order to GET BACK MUCH MORE.

The same dynamic is at work as in a ponzi scheme…greed and the lure of big money.

So beware your greed. It can cause you to lose lots of money.