Wealth is not created overnight!

 Bokang Moeko

“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas,” American economist Paul Samuelson said.

What this means is that there is no such thing as a quick buck when it comes to investing your money. If someone promises you unbelievable returns– between 30 percent and 40 percent like MMM does – of your original investment returns back within a very short period of time chances are that this is too good to be true.

The news that MMM SA members stand to lose thousands of rands after accounts were frozen and the mavros points system was reset due to a lack of money entering the alleged pyramid scheme, did not come as a surprise at all. (Recall thatone of MMM offerings, MMM Republic of Bitcoin, shut down in April after failing to give a promised 100 percent return on investment.)

According to fin24, MMM SA told members: “We have to declare a restart and start all over again. We have no choice”

But, guess what, anonymous leaders of the South African wing of the Russian alleged pyramid scheme blamed media panic for the reboot on April 30, this was stated by fin24.

Remember, in a pyramid scheme, the only way you can get to the top is if you are continuously growing the base, by recruiting, it is the volume of growth that keeps the money going up the pyramid. Truth be told: eventually, it gets to a point where the money requirement is exponential, but now it outgrows itself. The number of people entering the system is just not enough to keep the structure alive and that’s when it collapses.

If you put two and two together you will come up with – that time might have arrived for MMM. Media then has nothing to do with the reboot.

“We will quickly pay off the “old” mavro debts, no doubt about it. You just have to wait,” MMM SA said to its members.

Fin24 has already voiced its concern saying the same message was given by another alleged SA pyramid scheme Kipi, which last paid out “dreams” to its members in 2015. The system is very similar to MMM, but instead of “donations” it uses “dreams”.

The aftermath of MMM’s collapse will be devastating. People were really excited about it. One lady, someone I know, in particular stands out: she was selling her site in order to invest. Her neighbours, early adopters, have benefited greatly from joining MMM. So she hoped MMM would be her one-way ticket to success.

I then fully comprehended whatCity Press consumer finance Maya Fisher-French meant when she said those living in poverty have more to lose.

“They are putting in money they can ill afford to lose in the first place,” she said.

“I wouldn’t be surprised if those people that are putting money in have borrowed that money. They’ve gone to micro lenders to borrow this money and put it in…and that is going to compound the problem,” she said.

But,until now, “firm believers” still don’t believe it might be over. They are vainly hoping things will be better. One of such is the user who said, “Please recruit, recruit, recruit and ph(provide help), ph, ph, to help the system recover quickly.”

Basically, this is a line that reveals the potential Ponzi scheme (in a Ponzi scheme, members must recruit new investors) nature of MMM. And strengthens my resolve that people should stay away from it.

“There is no investment that can promise 15 percent or 30 percent returns without risk” – Karen Muller, Sanlaam.

So, next time, I hope we as Basotho will be very careful when we invest. Bearing in mind that, in investment, the higher the returns on investment the higher the risk. Simply put: when you invest in assets that potentially have a higher return there is always a risk-return trade off.

Remember: before you invest in any company do some research on it to find if it is a reputable company – a company you can trust with your precious hard-earned money; and, if something is too good to be true, it probably is; finally, mouthful by mouthful, we eat an elephant – that is how investing should be like.