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Thursday 13 October 2011
Sunday 9 October 2011
Money Market Funds Enter a World of Risk
Money market funds have been among the few places that investors could put their cash and sleep peacefully.
At the moment, that is not necessarily true.
On Tuesday, the Reserve Primary Fund, a giant money market fund whose parent helped invent that investment, said its customers would lose money. Instead of each share being worth a dollar for every dollar invested, it said its customers’ shares were worth only 97 cents. In Wall Street parlance, it “broke the buck,” a rare occurrence.
So far, it appears that no other money market funds have fallen below a dollar a share. And other money market managers have hastened to reassure investors that their money is safe. But the Primary Fund’s announcement did raise this question: What, in today’s world, is truly safe?
After all, the Primary Fund’s troubles did not occur in isolation. They followed the disappearance of both Lehman Brothers and Merrill Lynch, not to mention the government bailouts of the mortgage finance giants Fannie Mae and Freddie Mac and the insurance company American International Group. And if you haven’t already forgotten, there was the failure of the California thrift IndyMac in July.
And that’s why, in this market, financial advisers agreed on Wednesday, consumers need to become their own chief investment officers, even when it comes to something as simple as finding a place to put their cash.
“One by one, all of my safe havens aren’t so safe anymore, and that’s a bad thing,” said Matthew Tuttle, a certified financial planner and president of Tuttle Wealth Management in Stamford, Conn.
“It used to be O.K. to have money in a CD, but now you have to worry, ‘Is my bank going to go under?’ ” he added. “You used to be able to buy a guaranteed annuity from an insurance company, but now you have to worry, ‘Is my insurance company going to go under?’ Or, you can have auction-rate preferred securities, but now there is no market.”
Before you pull your cash out of your money market fund, you need to understand what you own. There is a big difference between money market mutual funds and the money market deposit accounts at a bank (and banks sometimes sell both).
Money market funds are essentially mutual funds that invest in securities that, until this week, were deemed relatively low risk. Those include government securities, certificates of deposit, asset-backed commercial paper and other highly liquid securities.
The Primary Fund got in trouble because some of its investments were in Lehman Brothers’ debt. To stop what is in essence a run on the fund, the Primary Fund has stopped all redemptions for up to seven days.
A money market deposit account, on the other hand, is entirely different. It is an interest-bearing bank account that is insured — up to $100,000 per account and up to $250,000 for some retirement accounts — by the Federal Deposit Insurance Corporation. Joint accounts are insured for $100,000 per account holder.
If you had been putting your money into a money market account because you wanted to avoid all risk, then you should consider the money market deposit accounts and other accounts insured by the F.D.I.C., like certificates of deposit and regular checking and savings accounts.
There are also Treasuries. But because so many investors were rushing into them on Wednesday, the yields have been driven down. “There is no yield,” said Saxon Birdsong, chief investment officer of Baltimore-Washington Financial Advisors. “It’s just a safety play.”
If you decide to invest — or stay — in a money market fund, there are several things you should keep in mind.
When it comes to money market funds, bigger may be better, several financial advisers said. Many investors use the funds that happen to be with the brokerage firm they are doing business with because it’s convenient to sweep money between accounts. But you should make sure your money market account is with a large, diversified money management company that would have the resources to make you whole, even if its funds ran into trouble.
Mr. Tuttle said companies like Fidelity and Vanguard fit into this category.
“I would be less comfortable with a smaller money management fund that didn’t have a lot of assets and wasn’t making a lot of money,” he said. “From my standpoint, I have a very high comfort level that if a Fidelity money market fund had toxic whatever, they would step up with the money from somewhere else to keep the buck.”
Once you decide on a provider, read the prospectus carefully. If you don’t understand the investments, call the company and ask for more details.
“I would encourage investors to not stop asking questions until they have complete comfort and peace about what they own,” said Karin Maloney Stifler, a certified financial planner with True Wealth Advisors in Hudson, Ohio.
And if you are still nervous, ask your current mutual fund company or brokerage if it has a Treasury or government money market fund that invests only in Treasury securities, said Greg McBride, senior financial analyst at Bankrate.com, a personal finance Web site.
“You will have to settle for a lower yield,” he said, “but it takes risk off the table.”
Indeed, this is one of those times when you shouldn’t necessarily choose a fund because it has a high yield. That higher yield could indicate that the fund is investing in riskier securities.
“This is a painful but poignant reminder that anything that is paying you a higher yield, you have to assume is carrying a higher risk,” said Peter Crane, president of Crane Data, which tracks money market mutual funds.
Finally, investors should diversify cash holdings, just as they would with a stock and bond portfolio.
“If you have money market mutual funds with multiple providers, you are hedging against the risk that any one of them will encounter problems that they can’t survive,” Ms. Stifler said.
But if you don’t have a strong stomach for the slightest risk, stick with investments that are F.D.I.C. insured, even if you need to sacrifice a little yield.
After all, “this is a portion of your portfolio that should help you sleep at night, not keep you awake,” Mr. McBride said.
The Investment Company Institute, the mutual fund industry’s trade group, compiled a list of statements late Wednesday from money-market mutual fund managers that assured investors their funds were safe. Here are the links to the fund company’s statements:
Blackrock (pdf)
Columbia Management (pdf)
Evergreen Investments
Federated Investors (pdf)
Franklin Templeton
Invesco (pdf)
Legg Mason(pdf)
MFS (pdf)
Oppenheimer Funds
Pimco
Schwab (pdf)
State Street
T. Rowe Price
Vanguard
Douglas Healey for The New York Times
Matthew Tuttle said money management funds at large brokerage firms can be reassuring for investors.
Multimedia
Steve Ruark for The New York Times
Saxon Birdsong said putting money in Treasuries now is a “safety play.”
Readers' Comments
Readers shared their thoughts on this article.
On Tuesday, the Reserve Primary Fund, a giant money market fund whose parent helped invent that investment, said its customers would lose money. Instead of each share being worth a dollar for every dollar invested, it said its customers’ shares were worth only 97 cents. In Wall Street parlance, it “broke the buck,” a rare occurrence.
So far, it appears that no other money market funds have fallen below a dollar a share. And other money market managers have hastened to reassure investors that their money is safe. But the Primary Fund’s announcement did raise this question: What, in today’s world, is truly safe?
After all, the Primary Fund’s troubles did not occur in isolation. They followed the disappearance of both Lehman Brothers and Merrill Lynch, not to mention the government bailouts of the mortgage finance giants Fannie Mae and Freddie Mac and the insurance company American International Group. And if you haven’t already forgotten, there was the failure of the California thrift IndyMac in July.
And that’s why, in this market, financial advisers agreed on Wednesday, consumers need to become their own chief investment officers, even when it comes to something as simple as finding a place to put their cash.
“One by one, all of my safe havens aren’t so safe anymore, and that’s a bad thing,” said Matthew Tuttle, a certified financial planner and president of Tuttle Wealth Management in Stamford, Conn.
“It used to be O.K. to have money in a CD, but now you have to worry, ‘Is my bank going to go under?’ ” he added. “You used to be able to buy a guaranteed annuity from an insurance company, but now you have to worry, ‘Is my insurance company going to go under?’ Or, you can have auction-rate preferred securities, but now there is no market.”
Before you pull your cash out of your money market fund, you need to understand what you own. There is a big difference between money market mutual funds and the money market deposit accounts at a bank (and banks sometimes sell both).
Money market funds are essentially mutual funds that invest in securities that, until this week, were deemed relatively low risk. Those include government securities, certificates of deposit, asset-backed commercial paper and other highly liquid securities.
The Primary Fund got in trouble because some of its investments were in Lehman Brothers’ debt. To stop what is in essence a run on the fund, the Primary Fund has stopped all redemptions for up to seven days.
A money market deposit account, on the other hand, is entirely different. It is an interest-bearing bank account that is insured — up to $100,000 per account and up to $250,000 for some retirement accounts — by the Federal Deposit Insurance Corporation. Joint accounts are insured for $100,000 per account holder.
If you had been putting your money into a money market account because you wanted to avoid all risk, then you should consider the money market deposit accounts and other accounts insured by the F.D.I.C., like certificates of deposit and regular checking and savings accounts.
There are also Treasuries. But because so many investors were rushing into them on Wednesday, the yields have been driven down. “There is no yield,” said Saxon Birdsong, chief investment officer of Baltimore-Washington Financial Advisors. “It’s just a safety play.”
If you decide to invest — or stay — in a money market fund, there are several things you should keep in mind.
When it comes to money market funds, bigger may be better, several financial advisers said. Many investors use the funds that happen to be with the brokerage firm they are doing business with because it’s convenient to sweep money between accounts. But you should make sure your money market account is with a large, diversified money management company that would have the resources to make you whole, even if its funds ran into trouble.
Mr. Tuttle said companies like Fidelity and Vanguard fit into this category.
“I would be less comfortable with a smaller money management fund that didn’t have a lot of assets and wasn’t making a lot of money,” he said. “From my standpoint, I have a very high comfort level that if a Fidelity money market fund had toxic whatever, they would step up with the money from somewhere else to keep the buck.”
Once you decide on a provider, read the prospectus carefully. If you don’t understand the investments, call the company and ask for more details.
“I would encourage investors to not stop asking questions until they have complete comfort and peace about what they own,” said Karin Maloney Stifler, a certified financial planner with True Wealth Advisors in Hudson, Ohio.
And if you are still nervous, ask your current mutual fund company or brokerage if it has a Treasury or government money market fund that invests only in Treasury securities, said Greg McBride, senior financial analyst at Bankrate.com, a personal finance Web site.
“You will have to settle for a lower yield,” he said, “but it takes risk off the table.”
Indeed, this is one of those times when you shouldn’t necessarily choose a fund because it has a high yield. That higher yield could indicate that the fund is investing in riskier securities.
“This is a painful but poignant reminder that anything that is paying you a higher yield, you have to assume is carrying a higher risk,” said Peter Crane, president of Crane Data, which tracks money market mutual funds.
Finally, investors should diversify cash holdings, just as they would with a stock and bond portfolio.
“If you have money market mutual funds with multiple providers, you are hedging against the risk that any one of them will encounter problems that they can’t survive,” Ms. Stifler said.
But if you don’t have a strong stomach for the slightest risk, stick with investments that are F.D.I.C. insured, even if you need to sacrifice a little yield.
After all, “this is a portion of your portfolio that should help you sleep at night, not keep you awake,” Mr. McBride said.
The Investment Company Institute, the mutual fund industry’s trade group, compiled a list of statements late Wednesday from money-market mutual fund managers that assured investors their funds were safe. Here are the links to the fund company’s statements:
Blackrock (pdf)
Columbia Management (pdf)
Evergreen Investments
Federated Investors (pdf)
Franklin Templeton
Invesco (pdf)
Legg Mason(pdf)
MFS (pdf)
Oppenheimer Funds
Pimco
Schwab (pdf)
State Street
T. Rowe Price
Vanguard
How to Make Money Marketing
Nowadays, online entrepreneurs are using articles to generate leads and increase their conversion rate. Writing is a very effective way to capture customers’ attention and interest. By distributing such write-ups on the internet, the chance of a business to get a wider audience is high. Business owners are also hiring freelance writers and bloggers to spread the word for them. Compensation depends on the person’s skills and years of experience. If you have a passion in writing, this is your opportunity to make money online.
The beautiful truth of the matter is that you don’t have to be a professional writer to enter this industry. As a matter of fact, they won’t require you to have a formal education in publishing or to attend a 4-year course for this particular job. As long as you can express your thoughts and opinion in English, with acceptable grammar of course, you can easily penetrate the writing business. So, practice your writing style now and think of what type of topic is interesting to readers.
When writing or blogging for a specific company or product, you have to remember that simple wordings are much more appreciated than encyclopedia-type articles. Think about your audience. Most likely they are ordinary people who want to immediately understand the article without the need of looking up in a dictionary for word meanings. So the rule is quite simple. As much as possible, just make it simple and avoid very long sentences that may confuse the reader.
What about topic? DIY (do it yourself) and other helpful information are much preferred today. People want to learn so share your knowledge about cooking, baking, gardening, blogging, web designing, etc. Informative articles and blog posts are very much in-demand. Take advantage by distributing your articles to major article directories, forums, blog networks, Ezines and web magazines.
If you have a website, set up a plugin or tool that will allow your followers to subscribe to your posts. In this way, they will automatically receive a notification every time you have a new published article. There are plenty of free tools out there but you can also buy a software that will make it easy for your readers to subscribe. Don’t forget to add FaceBook, Twitter and other social networking buttons to let your visitors share your articles fast and easy.
The beautiful truth of the matter is that you don’t have to be a professional writer to enter this industry. As a matter of fact, they won’t require you to have a formal education in publishing or to attend a 4-year course for this particular job. As long as you can express your thoughts and opinion in English, with acceptable grammar of course, you can easily penetrate the writing business. So, practice your writing style now and think of what type of topic is interesting to readers.
When writing or blogging for a specific company or product, you have to remember that simple wordings are much more appreciated than encyclopedia-type articles. Think about your audience. Most likely they are ordinary people who want to immediately understand the article without the need of looking up in a dictionary for word meanings. So the rule is quite simple. As much as possible, just make it simple and avoid very long sentences that may confuse the reader.
What about topic? DIY (do it yourself) and other helpful information are much preferred today. People want to learn so share your knowledge about cooking, baking, gardening, blogging, web designing, etc. Informative articles and blog posts are very much in-demand. Take advantage by distributing your articles to major article directories, forums, blog networks, Ezines and web magazines.
If you have a website, set up a plugin or tool that will allow your followers to subscribe to your posts. In this way, they will automatically receive a notification every time you have a new published article. There are plenty of free tools out there but you can also buy a software that will make it easy for your readers to subscribe. Don’t forget to add FaceBook, Twitter and other social networking buttons to let your visitors share your articles fast and easy.
Money Market: Introduction
Whenever a bear market comes along, investors realize (yet again!) that the stock market is a risky place for their savings. It's a fact we tend to forget while enjoying the returns of a bull market! Unfortunately, this is part of the risk-return tradeoff. To get higher returns, you have to take on a higher level of risk. For many investors, a volatile market is too much to stomach - the money market offers an alternative to these higher-risk investments. The money market is better known as a place for large institutions and government to manage their short-term cash needs. However, individual investors have access to the market through a variety of different securities. In this tutorial, we'll cover various types of money market securities and how they can work in your portfolio. Next: Money Market: What Is It? Table of Contents 1) Money Market: Introduction 2) Money Market: What Is It? 3) Money Market: Treasury Bills (T-Bills) 4) Money Market: Certificate Of Deposit (CD) 5) Money Market: Commercial Paper 6) Money Market: Banker's Acceptance 7) Money Market: Eurodollars 8) Money Market: Repos 9) Money Market: Conclusion Read more: http://www.investopedia.com/university/moneymarket/#ixzz1aIwyGDC9
Money market
This article is about the financial market. For the fund type, see Money market fund. For the bank deposit account, see Money market account.
| Finance |
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Contents[hide] |
[edit] Overview
The money market consists of financial institutions and dealers in money or credit who wish to either borrow or lend. Participants borrow and lend for short periods of time, typically up to thirteen months. Money market trades in short-term financial instruments commonly called "paper." This contrasts with the capital market for longer-term funding, which is supplied by bonds and equity.The core of the money market consists of interbank lending--banks borrowing and lending to each other using commercial paper, repurchase agreements and similar instruments. These instruments are often benchmarked to (i.e. priced by reference to) the London Interbank Offered Rate (LIBOR) for the appropriate term and currency.
Finance companies, such as GMAC, typically fund themselves by issuing large amounts of asset-backed commercial paper (ABCP) which is secured by the pledge of eligible assets into an ABCP conduit. Examples of eligible assets include auto loans, credit card receivables, residential/commercial mortgage loans, mortgage-backed securities and similar financial assets. Certain large corporations with strong credit ratings, such as General Electric, issue commercial paper on their own credit. Other large corporations arrange for banks to issue commercial paper on their behalf via commercial paper lines.
In the United States, federal, state and local governments all issue paper to meet funding needs. States and local governments issue municipal paper, while the US Treasury issues Treasury bills to fund the US public debt.
- Trading companies often purchase bankers' acceptances to be tendered for payment to overseas suppliers.
- Retail and institutional money market funds
- Banks
- Central banks
- Cash management programs
- Arbitrage ABCP conduits, which seek to buy higher yielding paper, while themselves selling cheaper paper.
- Merchant Banks
[edit] Common money market instruments
- Certificate of deposit - Time deposits, commonly offered to consumers by banks, thrift institutions, and credit unions.
- Repurchase agreements - Short-term loans—normally for less than two weeks and frequently for one day—arranged by selling securities to an investor with an agreement to repurchase them at a fixed price on a fixed date.
- Commercial paper - Unsecured promissory notes with a fixed maturity of one to 270 days; usually sold at a discount from face value.
- Eurodollar deposit - Deposits made in U.S. dollars at a bank or bank branch located outside the United States.
- Federal agency short-term securities - (in the U.S.). Short-term securities issued by government sponsored enterprises such as the Farm Credit System, the Federal Home Loan Banks and the Federal National Mortgage Association.
- Federal funds - (in the U.S.). Interest-bearing deposits held by banks and other depository institutions at the Federal Reserve; these are immediately available funds that institutions borrow or lend, usually on an overnight basis. They are lent for the federal funds rate.
- Municipal notes - (in the U.S.). Short-term notes issued by municipalities in anticipation of tax receipts or other revenues.
- Treasury bills - Short-term debt obligations of a national government that are issued to mature in three to twelve months.
- Money funds - Pooled short maturity, high quality investments which buy money market securities on behalf of retail or institutional investors.
- Foreign Exchange Swaps - Exchanging a set of currencies in spot date and the reversal of the exchange of currencies at a predetermined time in the future.
- Short-lived mortgage- and asset-backed securities
Friday 7 October 2011
Thursday 6 October 2011
Tuesday 4 October 2011
Money Making Online In India
Hello Indians, first of all I would like to thank you for visiting my blog. As an introduction, i founded this blog in earlier 2009 & from that day onwards i am serving as a part-time entrepreneur working from home. Basically, I am a software engineer full-time & you know it’s really hard to find spare time for working with my online businesses. I started this blog with no aim but it’s growing faster day-by-day….Lets hope for the best in future.
Okay, let’s come to the topic of making money online.
You should know that Internet has the major flexibility for every individual to start their own online business especially spending less time. The advantages of working with online business are, you could work from anywhere and work at anytime as per your convenient. So i am taking advantageous of that flexibility, why not you ?
Yes, i will help you here to understand and to take the right steps in making money from Internet. Don’t worry, I don’t ask you money ! Also, it is true that there are real ways to make money from Internet & it’s extremely possible.
The requirements are Time & Knowledge. You should find time daily to work & you should have the knowledge like How To do ? Where To Do ? Always, I advice in my blog, Believe In Yourself because Internet has many fraudulent sites that promises to help you making money but finally just steals your money without giving back anything.Here are the original methods for making money….(without even spending 1 Rupee).
image: dwanzy58
I am going to brief the 2 most successful methods of making money: Blogging & Affiliate Marketing. At the end of this article, you will find more methods for making money from Internet that may require you to spend money or without spending money.
or not all the method works. You have to find and locate the best method that helps you in making money. Such a real method is Blogging…
It’s like a dairy or your scrap book, you could write about any topic as hobby & anytime you feel convenient. People can blog for many reasons but ultimately you should know that blog makes you money too. There are no restrictions; any one can start a blog even from India or any where from the world FOR FREE.
In India, there are many successful bloggers who are running useful blogs which helps everyone on a particular topic. And these Indian bloggers are making decent money too. To mention, Amit Agarwal a full time blogger who owns Labnol.org is earning several 1000$ everyday from blogging. This Indian Bloggers Directory shows few Indian bloggers who are registered there and there are several more successful bloggers who are unknown to me or you from India.
So let’s learn about blogging & making money from blogs.
To summarize, the idea is to choose a blog topic, create a free blog, write useful content regularly, sign up with money making programs, get traffic (more visitors) to your blog from search engines & credit your earned money to bank account.
To suggest, you could write about India, Indian cricketers, Indian celebrities, Indian Sports, Indian business etc. Or in the other front, write about programming languages, about software technology, hardware technologies, automobiles, arts, latest trends etc.
Once your topic is ready, go to Blogger.com and create a free blog. Select a good blog name, few examples are like myjavatips.blogspot.com, guitarteacher.blogspot.com, indiatrendz.blogspot.com etc.
Here is a video that helps you on, how to create a blogger blog ?
The following articles may help you to improve your new blog.
Is it possible to earn money without doing any work in this world ? The answer is, NO. Without doing any work, you cannot earn money. You have to work.
Once you have 50+ (for example) articles, for sure your blog will be useful for a visitor who is looking for information. That means you are well established on your topic. For sure at this stage, you will get good number of visitor’s at least 50-100 visitors per day.
Learn Search Engine Optimization from Google which helps you to gain good traffic from search engines (esp. Google). SEO is optimizing your blog and content for search engine traffic. You have to play a bit with keywords and that’s interesting too.
This is the right time to think about money. Lets see how to setup your blog to make money ?
To know, there are no restrictions in Internet and you could even sell a product in US or Canada sitting in Chennai or Bangalore (or a village) from India. That’s the interesting part of affiliate marketing. You don’t even need a blog or a web site.
Generally, you will earn 5% to 75% commission on each product sale. Say for example, if you sell 1 ebook for 50$ then at 50% commission, you will earn 25$ per sale. And if you sell 10 ebooks in a month, you will earn 25$ X 10 = 250$ (approx. Rupees 11,250). That’s definitely a great income to average Indian. So the value of the product and the number of sales decides your amount of income.
Okay, let’s see how to do all these….
) etc.
Select any product anything like weight loss products, costume products to computer software’s that you find worth to the buyer. Click the Promote icon shown near to each product, it gives you a hop link. Using that link, you have to promote that product for sale.
Alternatively, you could create a Paypal account which is a digital account (you have to link your credit card to it) and using that you could receive/transfer your money from others. But to mention, Google Adsense gives money only through cheque.
image: Raman
Freelancing Jobs.
Freelancing is working for online office. Sites like Odesk, Elance are offering online jobs and you will be paid money per-hour basis for the work done. Jobs are like Software programming, web design, data entry, copy writing and much more jobs. Joining these sites is absolutely free, create your profile and look for job offers. Only thing you should need time to work & respective knowledge to complete the offered jobs.
Domain Name Selling.
Domain names are web site names. You have to look for good domain names & register them on your name. Net4domains, Znetindia, Godaddy are good places to register a domain name (usally, less than Rupees 200 for each domain name) of yours. Then sell the domain name in Godaddy, Sedo. Generally, a good domain can go sale for more than 1000$. Find more about Making money from domain names.
Writing Articles And Earning Money.
Write articles for hubpages, squidoo which are Adsense revenue sharing sites. What ever money your article makes you will get a share (usually 50% to 60% of Adsense earnings). Hubpages are sharing the Amazon affiliate revenue & Konetra Ads revenue too. If you have writing habits then write some useful stuff and earn money. Also, it’s free to join. Find more Sites for writing articles and earning money.
Photography & Uploading Videos.
Do you have a camera ? Then take good photos and go to Shutterstock. Upload your photos. When some one downloads your photo, you will be paid money for each download. Also, if you shoot video, upload to Flixya, Metacafe and earn money based on the number of people viewing your video.
Some more ways….
Always keep in mind that you could not earn money without doing any work. But when you understand what to do ? & how to do ? Then you will be in a clear position to do the right stuffs. You should invest Time, Knowledge & Hard Work in order to make money online without even spending 1 Rupee !
Subscribe to my blog Via Rss or Via E-mail, Get more money making tips to learn & grow in future.
Okay, let’s come to the topic of making money online.
You should know that Internet has the major flexibility for every individual to start their own online business especially spending less time. The advantages of working with online business are, you could work from anywhere and work at anytime as per your convenient. So i am taking advantageous of that flexibility, why not you ?
Yes, i will help you here to understand and to take the right steps in making money from Internet. Don’t worry, I don’t ask you money ! Also, it is true that there are real ways to make money from Internet & it’s extremely possible.
The requirements are Time & Knowledge. You should find time daily to work & you should have the knowledge like How To do ? Where To Do ? Always, I advice in my blog, Believe In Yourself because Internet has many fraudulent sites that promises to help you making money but finally just steals your money without giving back anything.Here are the original methods for making money….(without even spending 1 Rupee).
Welcome !
I am going to brief the 2 most successful methods of making money: Blogging & Affiliate Marketing. At the end of this article, you will find more methods for making money from Internet that may require you to spend money or without spending money.
Money Making From Blogs in India.
There are numerous ways to make money from Internet, not all the methods are realor not all the method works. You have to find and locate the best method that helps you in making money. Such a real method is Blogging…
Introduction To Blogs.
To define, a blog is a web site to share your thoughts, ideas, tips, even your person life and anything about you like to share online.It’s like a dairy or your scrap book, you could write about any topic as hobby & anytime you feel convenient. People can blog for many reasons but ultimately you should know that blog makes you money too. There are no restrictions; any one can start a blog even from India or any where from the world FOR FREE.
Indian Bloggers.
Now-a-days, blogs are very popular in this Web 2.0 era. More and more bloggers are coming everyday and in a minute 100′s & 1000′s of new blogs are being created. You could check Technorati for the State of blogosphere.In India, there are many successful bloggers who are running useful blogs which helps everyone on a particular topic. And these Indian bloggers are making decent money too. To mention, Amit Agarwal a full time blogger who owns Labnol.org is earning several 1000$ everyday from blogging. This Indian Bloggers Directory shows few Indian bloggers who are registered there and there are several more successful bloggers who are unknown to me or you from India.
So let’s learn about blogging & making money from blogs.
To summarize, the idea is to choose a blog topic, create a free blog, write useful content regularly, sign up with money making programs, get traffic (more visitors) to your blog from search engines & credit your earned money to bank account.
Choose Blog Topic.
First step, you have to choose a blog topic. As I mentioned earlier, you could choose any blog topic that you love. Select a topic that you are more interested to write because you have to keep on writing useful content on that topic. I am interested to right about online business and hence i started a blog on that topic.To suggest, you could write about India, Indian cricketers, Indian celebrities, Indian Sports, Indian business etc. Or in the other front, write about programming languages, about software technology, hardware technologies, automobiles, arts, latest trends etc.
Once your topic is ready, go to Blogger.com and create a free blog. Select a good blog name, few examples are like myjavatips.blogspot.com, guitarteacher.blogspot.com, indiatrendz.blogspot.com etc.
Here is a video that helps you on, how to create a blogger blog ?
Write Useful Content.
Your blog is up in Internet and you are ready to start your business life. You have to write useful articles on your blog. Write whatever you know in-and-around the topic. Don’t think about money first, concentrate on your blog and try to help the visitors who are coming to your blog with useful stuffs. This is the Secret of Blog Growth. Even this is a very big article of me & it helps you providing useful information. If you don’t have time to read this article fully, better bookmark this page (press Ctrl+D).The following articles may help you to improve your new blog.
- How to gain blog popularity ? using shortcut methods.
- Learn the Tetrad of blogging which explains you the importance of content, traffic and making money out of it.
Is it possible to earn money without doing any work in this world ? The answer is, NO. Without doing any work, you cannot earn money. You have to work.
Once you have 50+ (for example) articles, for sure your blog will be useful for a visitor who is looking for information. That means you are well established on your topic. For sure at this stage, you will get good number of visitor’s at least 50-100 visitors per day.
Learn Search Engine Optimization from Google which helps you to gain good traffic from search engines (esp. Google). SEO is optimizing your blog and content for search engine traffic. You have to play a bit with keywords and that’s interesting too.
This is the right time to think about money. Lets see how to setup your blog to make money ?
Sign up For Money Making Programs.
There are plenty of opportunities to make money from your blog. Even I have compiled a big List of Money Making Programs that you could refer in future. The most proven methods are Pay-per-click advertising and Affiliate marketing. For now, I will recommend few programs which are good in payments.- Pay-per-click Advertising – This is displaying Advertisements on your blog. Whenever a visitor clicks on the ad, you will be paid money for that click (usually, 0.05$ per click). So if your blog generates more number of clicks then you will make more money. Join Google Adsense, Adbrite, Kontera which are the most popular PPC networks which are contextual (ie. displays ads related to your blog topic). I would recommend starting with Konetra & Adbrite, get used to PPC Ads then move to Google Adsense. Komli, Ads For Indians are few of the best Indian PPC networks to mention. For example, if your blog gets 1000 visitors per day and 200 visitors are clicking on the Ads then you will earn 200 x 0.05 = 10$ per day. In a month, 10$ x 30 = 300$ per month. At the same time, if your blog gets 4000 visitors per day then you will make 1200 $ per month (approx. Rupees 54,000) which is a huge income for an Indian. That’s great right
- Selling Products – This is about selling digital products (DVD’s, books, ebooks etc.) on your blog. Select products which are related to your blog topic and put them for sale. For every sale, you will be paid a percentage of money as commission. Join Amazon Associates, Clickbank which are the best Affiliate Networks which offers varieties of digital products and pays good commission (5% to 75%). It’s simple to integrate Amazon products on your blogger blog. See the below video.
Money Making From Affiliates In India.
Same like blogging, you could make money from affiliates in Iindia. Affiliate marketing is one of the best and easiest method for making money (if you follow the right steps). This article helps on how to become an affiliate marketer yourself in Internet.Introduction To Affiliates.
Affiliates are the one who sells others product. The idea is simple, you have to sell others product and you will earn commission for each sale. Products are usually digital products like DVD’s, ecourses, ebooks, software tools etc on any topic. So the amount of income depends on what product? And how you are selling the product wisely ?To know, there are no restrictions in Internet and you could even sell a product in US or Canada sitting in Chennai or Bangalore (or a village) from India. That’s the interesting part of affiliate marketing. You don’t even need a blog or a web site.
Generally, you will earn 5% to 75% commission on each product sale. Say for example, if you sell 1 ebook for 50$ then at 50% commission, you will earn 25$ per sale. And if you sell 10 ebooks in a month, you will earn 25$ X 10 = 250$ (approx. Rupees 11,250). That’s definitely a great income to average Indian. So the value of the product and the number of sales decides your amount of income.
Okay, let’s see how to do all these….
Joining Affiliate Networks From India.
Affiliate Networks are the place where you will find others products. You could join the affiliate network free of cost and you have to select a product. The major affiliate networks are Clickbank, Commission Junction, Google Affiliate etc. AffiliateCurry is one of the best Indian affiliate network that I know. I would recommend you to join Clickbank because it has huge number of products on various categories and it’s easy to operate for a beginner like you. Join Clickbank, you have to fill your details name, address (to receive cheque ) etc.Selecting Affiliate Products That Makes Money.
Now you are into Clickbank and the next step is finding a product. Finding a hot product in clickbank is simple. Every product has a gravity value. Gravity is the frequency of sales happening for that product in Internet. The more gravity to a product means, its selling good in Internet. So find a product which has higher gravity. At the same time, a high gravity product has more affiliates like you and hence there will be more competition in Internet to sell that product. So it is advisable to take a product which has medium gravity and more important it should be useful to buyer.Select any product anything like weight loss products, costume products to computer software’s that you find worth to the buyer. Click the Promote icon shown near to each product, it gives you a hop link. Using that link, you have to promote that product for sale.
Selling Affiliate Products To The World.
Selling the product in Internet is not a tough job. There are two methods to sell, one using free Article Marketing and second using Paid search advertising. Let’s see them in detail.- Free Methods of Selling – Article marketing is the method of writing articles related to the affiliate product and submitting to article directories. You have to add the affiliate link in that article so that a reader may click on that link and buys the product. It’s free to do. You could submit your articles to Hubpages, Squidoo, which i recommend. Don’t forget to add your affiliate link in that article. Good article gets more visitors and you will get more chances for selling the product.
- Paid Methods of Selling – You can drive traffic using paid advertising. Use Google Adwords or Yahoo Search Marketing and your Ad appears on Google search or Yahoo search, which sends traffic to your affiliate link but for every visitor you have to pay money (usually, 0.05$+ per visit).
Getting Money To Indian Bank Accounts.
In either way, PPC Ads or Selling Affiliate products, you will earn money in USD (US Dollar). All the international PPC, Affiliate Networks are giving money as cheques in USD (usually, once in a month or week). USD cheque’s are usually accepted in all banks in India like State Bank of India (SBI), ICICI, HDFC etc. A small amount of commission will be deducted, speak to your bank.Alternatively, you could create a Paypal account which is a digital account (you have to link your credit card to it) and using that you could receive/transfer your money from others. But to mention, Google Adsense gives money only through cheque.
image: Raman
Rupees Here
More Ways of Making Money Online In India.
Apart from blogging and affiliate marketing there are much more ways to make money. Below are few more methods, you could explore and take a good decision.Freelancing Jobs.
Freelancing is working for online office. Sites like Odesk, Elance are offering online jobs and you will be paid money per-hour basis for the work done. Jobs are like Software programming, web design, data entry, copy writing and much more jobs. Joining these sites is absolutely free, create your profile and look for job offers. Only thing you should need time to work & respective knowledge to complete the offered jobs.
Domain Name Selling.
Domain names are web site names. You have to look for good domain names & register them on your name. Net4domains, Znetindia, Godaddy are good places to register a domain name (usally, less than Rupees 200 for each domain name) of yours. Then sell the domain name in Godaddy, Sedo. Generally, a good domain can go sale for more than 1000$. Find more about Making money from domain names.
Writing Articles And Earning Money.
Write articles for hubpages, squidoo which are Adsense revenue sharing sites. What ever money your article makes you will get a share (usually 50% to 60% of Adsense earnings). Hubpages are sharing the Amazon affiliate revenue & Konetra Ads revenue too. If you have writing habits then write some useful stuff and earn money. Also, it’s free to join. Find more Sites for writing articles and earning money.
Photography & Uploading Videos.
Do you have a camera ? Then take good photos and go to Shutterstock. Upload your photos. When some one downloads your photo, you will be paid money for each download. Also, if you shoot video, upload to Flixya, Metacafe and earn money based on the number of people viewing your video.
Some more ways….
- Do Online Forex trading, this involves buying and selling currencies.
- Can take online surveys about a product and get paid for each completed survey.
- Join Pay-per-view sites like Clixsense, neobux and earn money for just viewing 1 minute advertisements in your free time.
- And much more Tips for Money Making Online here….
Final Thoughts…
So we are in the end of this article, I started small but this article went as huge with ~3000 words. Hope you are clear and got better ideas about making money from Internet.Always keep in mind that you could not earn money without doing any work. But when you understand what to do ? & how to do ? Then you will be in a clear position to do the right stuffs. You should invest Time, Knowledge & Hard Work in order to make money online without even spending 1 Rupee !
Subscribe to my blog Via Rss or Via E-mail, Get more money making tips to learn & grow in future.
Easy Online Money Making Tips
The pen has the power to turn a pauper into a prince. If you have a strong hold over your pen then use this artistic skill to fetch you some cash. On line writing is getting a great prominence in the field of web. Here you have the opportunity to make money once you publish your article.
Making money on-line by writing article is very popular among young people. It can help these youngsters to get some extra cash in their wallet. This would save them from the sea of debt as they would be able to repay their loans on time.
This article would highlight some important points related to the sites where you can publish your article.
Text broker
Text broker gives an opportunity for on line writing and this is a great place to start. This is a unique site and pays few dollars for a post. They might pay less but this is a place where you get paid immediately for your work. If the Text Broker’s staff gives high rating on your article then you might have bagged a chance of getting high paying assignment. But this site is only open for US residents.
PROS:
If you want to promote or market your writing skills then Constant Content is the best place to display your talent. Once your article is sold then Constant Content takes 35% commission from the total amount you get. If you write a 500 words article then you might be eligible to get $25 to $200.
Write on topics that should be relevant to the requirement of the buyers otherwise you might face trouble to sell them. There is a constant demand for custom writing assignment among the client of Constant Content. Try to write on the topics that have demand among the customers than writing randomly which has lesser value.
Follow the submission guideline sincerely as they have strict policy, if you face three rejections then you are not allowed to write anymore. Do you want quick success in this field? Then take a close look at how other writers are marketing their titles before you submit.
Signing up with Constant Content is a simple process and it does not require detailing of your personal information.
Triond
Triond is one of those sites that would pay you 50% of the ad revenue that gets engendered from your work. The articles that are published on Triond cannot be published in any other site as it might be marked as a duplicate content by Google which is against the web law.
Before the publication of the article an editor would review the content.
As your articles get published on one of their networking pages, it would start generating ad revenues.
PROS:
Hub Page is one of the most prominent pages on the web. You have the option of exhibiting your writing skills here. If the writing skills can draw attention then you can expect many comments on your post. You can post articles added with photo and a revenue widget which can be uploaded from E Bay and Amazon.
Add photographs and writes in a more polished way. If you add pictures it would attract more attention and this would help to pull up the rank.
The article not only gets exhibited in the social websites but also in the social bookmarking sites. You have the provision of sending the links of your article to your family and friends.
Associated Content
Associated Content is greatly used to publish various kinds of content on blog, websites, news and articles. This is where it is different from e How as you would earn a good amount of cash once readers start commenting on your posts and as they click on the Google ads displayed on the pages.
Based on the quality of the article the Associated Content pays $3 to $20 for each article. They stress on quality of the article based on spellings, grammars as well as on format.
But remember if you are a non-legal resident of US then no payment would be made out to you.
The way you get paid with Associated Content:
As you submit your article, it immediately goes for a review which doesn’t take more than 1 to 5 days. Once it is checked and approved you get the cash in hand.
Xomba
If you looking for cash by writing an article then it can’t get better than Xomba. It is on the developing process but its community is growing on good pace. Xomba is similar to Associated Content as in this case you can almost write about anything. And as the readers starts visiting your post you would start getting paid for your work.
Your pay would depend on the number of visitors clicking on the Google Ads in your posts. So try to produce informative content that would help the community.
Blogger Party
Blogger Party is a user friendly website. Like the other websites it has the same strategy of sharing ad revenue. This site is similar to Xomba as you would be able to trace down whoever is on-line and the availability of the updated posts.
So these are the simple ways that you can employ to earn some cash. Use your imagination and pen down the words that hover in your mind. Your writing skills can help you to earn without putting in a lot of physical labor. Try your hands on it and you are bound to succeed.
Kevin is a financial writer for Oak View Law Group, a trustworthy bankruptcy law firm. He has helped lots of debt burdened people with free counseling and advices on many finance related topics.
Making money on-line by writing article is very popular among young people. It can help these youngsters to get some extra cash in their wallet. This would save them from the sea of debt as they would be able to repay their loans on time.
This article would highlight some important points related to the sites where you can publish your article.
Text broker
Text broker gives an opportunity for on line writing and this is a great place to start. This is a unique site and pays few dollars for a post. They might pay less but this is a place where you get paid immediately for your work. If the Text Broker’s staff gives high rating on your article then you might have bagged a chance of getting high paying assignment. But this site is only open for US residents.
PROS:
- Speed – You get a fast result. People who are efficient in writing in fewer times have the option of earning well.
- Value – If you can provide a useful content then a demand of a handsome value is justified. Your hard work would be paid off.
- Quality – If you do not compromise with the quality of the content then you can expect good revenue to be generated from it.
If you want to promote or market your writing skills then Constant Content is the best place to display your talent. Once your article is sold then Constant Content takes 35% commission from the total amount you get. If you write a 500 words article then you might be eligible to get $25 to $200.
Write on topics that should be relevant to the requirement of the buyers otherwise you might face trouble to sell them. There is a constant demand for custom writing assignment among the client of Constant Content. Try to write on the topics that have demand among the customers than writing randomly which has lesser value.
Follow the submission guideline sincerely as they have strict policy, if you face three rejections then you are not allowed to write anymore. Do you want quick success in this field? Then take a close look at how other writers are marketing their titles before you submit.
Signing up with Constant Content is a simple process and it does not require detailing of your personal information.
Triond
Triond is one of those sites that would pay you 50% of the ad revenue that gets engendered from your work. The articles that are published on Triond cannot be published in any other site as it might be marked as a duplicate content by Google which is against the web law.
Before the publication of the article an editor would review the content.
As your articles get published on one of their networking pages, it would start generating ad revenues.
PROS:
- Any Format: If you write an original content this website accepts it in any format.
- No specific topic: You can write on any topic as Triond would search for a relevant website that would match your subject.
- Promotion and Earning: This website is a platform to promote your content and it would generate cash for you.
Hub Page is one of the most prominent pages on the web. You have the option of exhibiting your writing skills here. If the writing skills can draw attention then you can expect many comments on your post. You can post articles added with photo and a revenue widget which can be uploaded from E Bay and Amazon.
Add photographs and writes in a more polished way. If you add pictures it would attract more attention and this would help to pull up the rank.
The article not only gets exhibited in the social websites but also in the social bookmarking sites. You have the provision of sending the links of your article to your family and friends.
Associated Content
Associated Content is greatly used to publish various kinds of content on blog, websites, news and articles. This is where it is different from e How as you would earn a good amount of cash once readers start commenting on your posts and as they click on the Google ads displayed on the pages.
Based on the quality of the article the Associated Content pays $3 to $20 for each article. They stress on quality of the article based on spellings, grammars as well as on format.
But remember if you are a non-legal resident of US then no payment would be made out to you.
The way you get paid with Associated Content:
- Open an account with the Pay pal
- pay pal also provides a debit card
As you submit your article, it immediately goes for a review which doesn’t take more than 1 to 5 days. Once it is checked and approved you get the cash in hand.
Xomba
If you looking for cash by writing an article then it can’t get better than Xomba. It is on the developing process but its community is growing on good pace. Xomba is similar to Associated Content as in this case you can almost write about anything. And as the readers starts visiting your post you would start getting paid for your work.
Your pay would depend on the number of visitors clicking on the Google Ads in your posts. So try to produce informative content that would help the community.
Blogger Party
Blogger Party is a user friendly website. Like the other websites it has the same strategy of sharing ad revenue. This site is similar to Xomba as you would be able to trace down whoever is on-line and the availability of the updated posts.
So these are the simple ways that you can employ to earn some cash. Use your imagination and pen down the words that hover in your mind. Your writing skills can help you to earn without putting in a lot of physical labor. Try your hands on it and you are bound to succeed.
Kevin is a financial writer for Oak View Law Group, a trustworthy bankruptcy law firm. He has helped lots of debt burdened people with free counseling and advices on many finance related topics.
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Make Money Online
Making Money News
This site is being constantly updated to make sure it contains the latest and most accurate information to help you start making money online. Check back reguarly!Pyramid scheme
A pyramid scheme is a non-sustainable business model that involves promising participants payment, services or ideals, primarily for enrolling other people into the scheme or training them to take part, rather than supplying any real investment or sale of products or services to the public. Pyramid schemes are a form of fraud.[1][2]
Pyramid schemes are illegal in many countries including Albania, Australia[3], Brazil, Bulgaria, Canada, China[4], Colombia[5], Denmark, the Dominican Republic[6], Estonia[7], France, Germany, Hungary, Iceland, Iran[8], Italy[9], Japan[10], Mexico, Nepal, The Netherlands[11], New Zealand[12], Norway[13], the Philippines[14], Poland, Portugal, Romania[15], South Africa[16], Spain, Sri Lanka[17], Switzerland, Taiwan, Thailand[18], Turkey[19], the United Kingdom, and the United States[20].
These types of schemes have existed for at least a century, some with variations to hide their true nature, and many people believe that multilevel marketing is also a pyramid scheme.[21][22][23][24]
A successful pyramid scheme combines a fake yet seemingly credible business with a simple-to-understand yet sophisticated-sounding money-making formula which is used for profit. The essential idea is that a "con artist" Mr. X, makes only one payment. To start earning, Mr. X has to recruit others like him who will also make one payment each. Mr. X gets paid out of receipts from those new recruits. They then go on to recruit others. As each new recruit makes a payment, Mr. X gets a cut. He is thus promised exponential benefits as the "business" expands.
Such "businesses" seldom involve sales of real products or services to which a monetary value might be easily attached. However, sometimes the "payment" itself may be a non-cash valuable. To enhance credibility, most such scams are well equipped with fake referrals, testimonials, and information. The flaw is that there is no end benefit. The money simply travels up the chain. Only the originator (sometimes called the "pharaoh") and a very few at the top levels of the pyramid make significant amounts of money. The amounts dwindle steeply down the pyramid slopes. Individuals at the bottom of the pyramid (those who subscribed to the plan, but were not able to recruit any followers themselves) end up with a deficit.
Prior instances of this scheme have been called the "Airplane Game" and the four tiers labelled as "captain," "co-pilot," "crew," and "passenger" to denote a person's level. Another instance was called the "Original Dinner Party" which labeled the tiers as "dessert," "main course," "side salad," and "appetizer." A person on the "dessert" course is the one at the top of the tree. Another variant, "Treasure Traders," variously used gemology terms such as "polishers," "stone cutters," etc. or gems like "rubies," "sapphires," "diamonds," etc.
Such schemes may try to downplay their pyramid nature by referring to themselves as "gifting circles" with money being "gifted." Popular schemes such as the "Women Empowering Women"[25] do exactly this.
Whichever euphemism is used, there are 15 total people in four tiers (1 + 2 + 4 + 8) in the scheme - with the Airplane Game as the example, the person at the top of this tree is the "captain," the two below are "co-pilots," the four below are "crew," and the bottom eight joiners are the "passengers."
The eight passengers must each pay (or "gift") a sum (e.g. $1000) to join the scheme. This sum (e.g. $8000) goes to the captain who leaves, with everyone remaining moving up one tier. There are now two new captains so the group splits in two with each group requiring eight new passengers. A person who joins the scheme as a passenger will not see a return until they advance through the crew and co-pilot tiers and exit the scheme as a captain. Therefore, the participants in the bottom 3 tiers of the pyramid lose their money if the scheme collapses.
If a person is using this model as a scam, the confidence trickster would make the lion's share of the money. They would do this by filling in the first 3 tiers (with 1, 2, and 4 people) with phony names, ensuring they get the first 7 payouts, at 8 times the buy-in sum, without paying a single penny themselves. So if the buy-in were $1000, they would receive $8,000, paid for by the first 8 investors. They would continue to buy in underneath the real investors, and promote and prolong the scheme for as long as possible to allow them to skim even more from it before it collapses.
Although the 'Captain' is the person at the top of the tree, having received the payment from the 8 paying passengers, once he or she leaves the scheme is able to re-enter the pyramid as a 'Passenger' and hopefully recruit enough to reach captain again, thereby earning a second payout.
The United States Federal Trade Commission (FTC) warns "Not all multilevel marketing plans are legitimate. Some are pyramid schemes. It’s best not to get involved in plans where the money you make is based primarily on the number of distributors you recruit and your sales to them, rather than on your sales to people outside the plan who intend to use the products."[33] and states that research is your best tool and gives eight steps to follow:
WinCapita was a scheme run by Finnish criminals that involved about €100 million.
In early 2006, Ireland was hit by a wave of schemes with major activity in Cork and Galway. Participants were asked to contribute €20,000 each to a "Liberty" scheme which followed the classic eight-ball model. Payments were made in Munich, Germany to skirt Irish tax laws concerning gifts. Spin-off schemes called "Speedball" and "People in Profit" prompted a number of violent incidents and calls were made by politicians to tighten existing legislation.[37] Ireland has launched a website to better educate consumers to pyramid schemes and other scams.[38]
On 12 November 2008, riots broke out in the municipalities of Pasto, Tumaco, Popayan and Santander de Quilichao, Colombia after the collapse of several pyramid schemes. Thousands of victims had invested their money in pyramids that promised them extraordinary interest rates. The lack of regulation laws allowed those pyramids to grow excessively during several years. Finally, after the riots, the Colombian government was forced to declare the country in economical emergency to seize and stop those schemes. Several of the pyramid's managers were arrested, and these are being prosecuted for the crime of "illegal massive money reception."[39]
The Kyiv Post reported on 26 November 2008 that American citizen Robert Fletcher (Robert T. Fletcher III; aka "Rob") was arrested by the SBU (Ukraine State Police) after being accused by Ukrainian investors of running a Ponzi scheme and associated pyramid scam netting US$20 million. (The Kiev Post also reports that some estimates are as high as US$150M.)
Throughout 2010 and 2011 a number of authorities around the world including the Australian Competition and Consumer Commission, the Bank of Namibia and the Central Bank of Lesotho have declared TVI Express to be a pyramid scheme. TVI Express, operated by Tarun Trikha from India has apparently recruited hundreds of thousands of "investors", very few of whom, it is reported, have recouped any of their investmen
Pyramid schemes are illegal in many countries including Albania, Australia[3], Brazil, Bulgaria, Canada, China[4], Colombia[5], Denmark, the Dominican Republic[6], Estonia[7], France, Germany, Hungary, Iceland, Iran[8], Italy[9], Japan[10], Mexico, Nepal, The Netherlands[11], New Zealand[12], Norway[13], the Philippines[14], Poland, Portugal, Romania[15], South Africa[16], Spain, Sri Lanka[17], Switzerland, Taiwan, Thailand[18], Turkey[19], the United Kingdom, and the United States[20].
These types of schemes have existed for at least a century, some with variations to hide their true nature, and many people believe that multilevel marketing is also a pyramid scheme.[21][22][23][24]
Contents[hide] |
[edit] Concept and basic models
 | This article may contain original research. Please improve it by verifying the claims made and adding references. Statements consisting only of original research may be removed. More details may be available on the talk page. (February 2009) |
Such "businesses" seldom involve sales of real products or services to which a monetary value might be easily attached. However, sometimes the "payment" itself may be a non-cash valuable. To enhance credibility, most such scams are well equipped with fake referrals, testimonials, and information. The flaw is that there is no end benefit. The money simply travels up the chain. Only the originator (sometimes called the "pharaoh") and a very few at the top levels of the pyramid make significant amounts of money. The amounts dwindle steeply down the pyramid slopes. Individuals at the bottom of the pyramid (those who subscribed to the plan, but were not able to recruit any followers themselves) end up with a deficit.
[edit] The "Eight-Ball" model
Many pyramids are more sophisticated than the simple model. These recognize that recruiting a large number of others into a scheme can be difficult so a seemingly simpler model is used. In this model each person must recruit two others, but the ease of achieving this is offset because the depth required to recoup any money also increases. The scheme requires a person to recruit two others, who must each recruit two others, who must each recruit two others.
The "eight-ball" model contains a total of fifteen members. Note that unlike in the picture, the triangular setup in the cue game of eight-ball corresponds to an arithmetic progression 1 + 2 + 3 + 4 + 5 = 15. The pyramid scheme in the picture in contrast is a geometric progression 1 + 2 + 4 + 8 = 15.
Such schemes may try to downplay their pyramid nature by referring to themselves as "gifting circles" with money being "gifted." Popular schemes such as the "Women Empowering Women"[25] do exactly this.
Whichever euphemism is used, there are 15 total people in four tiers (1 + 2 + 4 + 8) in the scheme - with the Airplane Game as the example, the person at the top of this tree is the "captain," the two below are "co-pilots," the four below are "crew," and the bottom eight joiners are the "passengers."
The eight passengers must each pay (or "gift") a sum (e.g. $1000) to join the scheme. This sum (e.g. $8000) goes to the captain who leaves, with everyone remaining moving up one tier. There are now two new captains so the group splits in two with each group requiring eight new passengers. A person who joins the scheme as a passenger will not see a return until they advance through the crew and co-pilot tiers and exit the scheme as a captain. Therefore, the participants in the bottom 3 tiers of the pyramid lose their money if the scheme collapses.
If a person is using this model as a scam, the confidence trickster would make the lion's share of the money. They would do this by filling in the first 3 tiers (with 1, 2, and 4 people) with phony names, ensuring they get the first 7 payouts, at 8 times the buy-in sum, without paying a single penny themselves. So if the buy-in were $1000, they would receive $8,000, paid for by the first 8 investors. They would continue to buy in underneath the real investors, and promote and prolong the scheme for as long as possible to allow them to skim even more from it before it collapses.
Although the 'Captain' is the person at the top of the tree, having received the payment from the 8 paying passengers, once he or she leaves the scheme is able to re-enter the pyramid as a 'Passenger' and hopefully recruit enough to reach captain again, thereby earning a second payout.
[edit] Matrix schemes
Main article: Matrix scheme
Matrix schemes use the same fraudulent non-sustainable system as a pyramid; here, the participants pay to join a waiting list for a desirable product which only a fraction of them can ever receive. Since matrix schemes follow the same laws of geometric progression as pyramids, they are subsequently as doomed to collapse. Such schemes operate as a queue, where the person at head of the queue receives an item such as a television, games console, digital camcorder, etc. when a certain number of new people join the end of the queue. For example ten joiners may be required for the person at the front to receive their item and leave the queue. Each joiner is required to buy an expensive but potentially worthless item, such as an e-book, for their position in the queue. The scheme organizer profits because the income from joiners far exceeds the cost of sending out the item to the person at the front. Organizers can further profit by starting a scheme with a queue with shill names that must be cleared out before genuine people get to the front. The scheme collapses when no more people are willing to join the queue. Schemes may not reveal, or may attempt to exaggerate, a prospective joiner's queue position which essentially means the scheme is a lottery. Some countries have ruled that matrix schemes are illegal on that basis.[edit] Connection to multi-level marketing
Main article: Multi-level marketing
The network marketing or multi-level marketing (abbreviated MLM) business has become associated with pyramid schemes as "Some schemes may purport to sell a product, but they often simply use the product to hide their pyramid structure."[26] and the fact while some people call MLMs in general "pyramid selling"[27][28][29][30][31] others use the term to denote an illegal pyramid scheme masquerading as an MLM.[32]The United States Federal Trade Commission (FTC) warns "Not all multilevel marketing plans are legitimate. Some are pyramid schemes. It’s best not to get involved in plans where the money you make is based primarily on the number of distributors you recruit and your sales to them, rather than on your sales to people outside the plan who intend to use the products."[33] and states that research is your best tool and gives eight steps to follow:
- Find — and study — the company’s track record.
- Learn about the product
- Ask questions
- Understand any restrictions
- Talk to other distributors (beware shills)
- Consider using a friend or adviser as a neutral sounding board or for a gut check.
- Take your time.
- Think about whether this plan suits your talents and goals[33]
[edit] Connection to franchise fraud
Main article: Franchise fraud
Franchise fraud (or 'franchise churning') is defined by the U.S. Federal Bureau of Investigation as a pyramid scheme. The FBI website states:- pyramid schemes :—also referred to as franchise fraud or chain referral schemes—are marketing and investment frauds in which an individual is offered a distributorship or franchise to market a particular product. The real profit is earned, not by the sale of the product, but by the sale of new distributorships. Emphasis on selling franchises rather than the product eventually leads to a point where the supply of potential investors is exhausted and the pyramid collapses.[34]
[edit] Notable recent cases
[edit] Internet
In 2003, the United States Federal Trade Commission (FTC) disclosed what it called an internet-based "pyramid scam." Its complaint states that customers would pay a registration fee to join a program that called itself an "internet mall" and purchase a package of goods and services such as internet mail, and that the company offered "significant commissions" to consumers who purchased and resold the package. The FTC alleged that the company's program was instead and in reality a pyramid scheme that did not disclose that most consumers' money would be kept, and that it gave affiliates material that allowed them to scam others.[36]WinCapita was a scheme run by Finnish criminals that involved about €100 million.
[edit] Others
The 1997 rebellion in Albania was partially motivated by the collapse of pyramid schemes.In early 2006, Ireland was hit by a wave of schemes with major activity in Cork and Galway. Participants were asked to contribute €20,000 each to a "Liberty" scheme which followed the classic eight-ball model. Payments were made in Munich, Germany to skirt Irish tax laws concerning gifts. Spin-off schemes called "Speedball" and "People in Profit" prompted a number of violent incidents and calls were made by politicians to tighten existing legislation.[37] Ireland has launched a website to better educate consumers to pyramid schemes and other scams.[38]
On 12 November 2008, riots broke out in the municipalities of Pasto, Tumaco, Popayan and Santander de Quilichao, Colombia after the collapse of several pyramid schemes. Thousands of victims had invested their money in pyramids that promised them extraordinary interest rates. The lack of regulation laws allowed those pyramids to grow excessively during several years. Finally, after the riots, the Colombian government was forced to declare the country in economical emergency to seize and stop those schemes. Several of the pyramid's managers were arrested, and these are being prosecuted for the crime of "illegal massive money reception."[39]
The Kyiv Post reported on 26 November 2008 that American citizen Robert Fletcher (Robert T. Fletcher III; aka "Rob") was arrested by the SBU (Ukraine State Police) after being accused by Ukrainian investors of running a Ponzi scheme and associated pyramid scam netting US$20 million. (The Kiev Post also reports that some estimates are as high as US$150M.)
Throughout 2010 and 2011 a number of authorities around the world including the Australian Competition and Consumer Commission, the Bank of Namibia and the Central Bank of Lesotho have declared TVI Express to be a pyramid scheme. TVI Express, operated by Tarun Trikha from India has apparently recruited hundreds of thousands of "investors", very few of whom, it is reported, have recouped any of their investmen
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