Ask Mint | Why investors fall prey to Ponzi schemes
Ponzi schemes generally flourish when the overall investment climate is good, which makes investors think that this time it is really going to be different
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A ponzi scheme refers to any investment scheme in which it is hard to determine a return on capital versus the return of capital.
I can give you back you money, the return of capital, and tell you that you are making money, the return on capital.
It is hard to tell sometimes whether you are getting a return or simply your money back.
michael