Should I invest Rs 11,000/- in a scheme which will give me back Rs 4,000/- p.m. for 12 months?


Dear Fpguru,
I have gone through your website & found it really helpful. I would like to ask you about an investment scheme I have come across. It is a scheme being offered by a leading media survey company which on investment of Rs 11,000/- today gives back Rs 4,000/- every month for next 12 months.

I am very interested in this scheme, please advise whether to invest or not?




Dear Parag,

We thank you for visiting our website & asking us a question. The scheme you are talking about is not something new but has been available since a long time. Previously many other companies used to offer it, the media survey company you talk about is offering it now.

Before going for such an ‘investment’, you need to first understand whether it is an investment or not in the first place. The scheme you speak about is not receiving the Rs 11,000/- you pay as an investment in their company but as a subscription to their magazine. This is the first point to keep in mind.

The second point is in fact more important. If you invest Rs 11,000/- in a scheme & receive Rs 4,000/- per month for the next 12 months, do you know what is the returns you are getting on your investment? The monthly returns are 35% & the annual return is a mind-blowing 425%. You have to keep these returns in perspective with all assets. When Sensex, India’s premier index has given a historical return of 18% p.a. approx with moderate risk, you have an ‘investment’ giving 425% p.a. supposedly with no risk, you need to be a little suspicious. To even think this kind of return is possible is stretching anyone’s imagination. If a company is giving you 425% p.a. returns what is that company then earning?

We mentioned these schemes are not new but have been offered since a long time. In fact there is a name given to these schemes- Ponzi schemes. It works on high promises. Seeing these promises many novice investors put their money in it & receive the returns promised initially. As the fame of the scheme spreads more people invest. The new investments are used to pay the old investors their dividends & this goes on till one fine day you see the company’s shutters down. Apparently once the company management had accumulated their share they just vanish, leaving investors wondering what hit them.

We at realize that there are many novice investors out there & we would like to say one thing before you invest in any exotic product offering fantastic returns- ‘ If it’s too good to be true, it ain’t true’!

Hope this solves your query!


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