Usually they promise very good return. Few days ago, I meet with one client, who claimed he had joint the "venture" (Gold Mine) company which pay him dividend every month. In less than one year's time, he already took back all his principals and now he do nothing but the dividend keep on coming. To him this is passive income and he tried to convince me to invest into this company too. Wait, where's the money to pay the dividend come from?
They promise pay dividend of more than 10% in the form of "paper gold" each month. The "paper gold" can be converted into credit which equal to USD. Sound great, ya! But I reject it. The reason is, basically, if the company can generate so good in return, why they need to find more investors to join them? They can easily borrow money from any bank, with the cost of less than 6%, why need to pay dividend of more than 100% to all those invest into their company? Even the country's most profitable business would not generate 100% of return in few months time!
This could be another Gold Ptd Ltd or Oilpods or Sunshine Empire. There are always people who will believe their story and join them. As a smart investor, just think twice, how you earn the hard earn money, if it's so simple, everybody can just stop working! When something smell fishy, or something too good to be true, it probably is.