When people invest money, they often are asked what do you want and the answer is more. Partially it is a good answer, but in reality it means sometimes losing your money because some investments are too good to be true. It happens to many, it often happens to a close net association or ethnic group because the victims tend to trust the person at the top.
In an article from the Associated Press, about 500 investors mainly from South Florida’s Venezuelan American community were taken in by Efrain Betancourt sales pitch of high-interest returns on their investments in his short-term loan operation Sky Group USA, the Miami Herald reported.
Mr. Betancourt raised $66 million in promissory notes, much of it went to his lifestyle including a large waterfront condo and a wedding to his 4th wife in Monaco. Mr. Betancourt paid out $19 million in interest using a Ponzi scheme or the first people in received money but that did not last long.
The scheme lasted January 2016 to March 2020 which countless borrowers defaulted on their payday loans. Sky Group had a cash flow problem and unable to make interest payments on investor’s promissory notes.
The defence lawyer argued the promissory notes are loans, not securities so the company did not break the law when they failed to pay back the lenders.
Linking to dividend paying stocks, companies which make a profit over a long period of time can pay dividends. If you receive dividends you do not expect high returns, it is a wonderful bonus if you receive greater than 10%, but the expectation when buying should not be very high returns. In the story about the rabbit and the turtle – slow and steady wins the race and people do not lose their principal investment. If you get pressured to send money quickly, slow it down.
There are more questions than answers, till the next time – to raising questions.