When people read about failed investments, a common misconception is that the victims must not have thought things through carefully enough or made other “stupid” decisions. Unfortunately, however, intelligent people can fall into the trap of investment and money-making opportunities that are not expected and could even evolve into total scams.
Here are some compelling examples for people to be aware of as they seek legitimate ways to increase their financial stability.
1. Multilevel Marketing (MLM) Opportunities
Multilevel marketing (MLM) — also known as network marketing — opportunities advertise as home-based businesses that let people sell everything from essential oils to makeup. However, it’s not always obvious from the start that money-making mostly happens when people recruit others to join the business model.
However, numerous studies show that most people involved in MLM programs either don’t make money or actually lose what they originally invested. For example, one investigation put 99% of participants in that group. Other studies give slightly better odds for making money, but they still fall short of what the recruitment materials typically promise.
People who sell MLM products and try to get others to buy them are often called distributors. One U.S. federal investigation into a particular business found distributors earned less than $5 on average per month.
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