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A friend of mine join a network marketing organization by investing 10,000 because his girlfriend is in it. He introduced his handler/manager and he gave a speech about how easy it is to earn by only investing 10,000 and his main selling point was that its possible to earn 2-4 million in a year. And my job is to just get my left and right node(of the tree).

The product the company is selling is some online tutorial/course which is totally useless(esp to me).

I have done some online research on it and got mixed reviews regarding the company hence I am really skeptical about joining it. Additional reason for being skeptical are:

  • I find the whole 1:2 and 2:1 ratio rubbish. Its more reason for not getting paid.
  • And that I will get paid 2700 when I get that 1:2 and 2:1.
  • By my calculation I(or my child nodes) have to get 18 people to join to break-even my investment.
  • Every year I have to deposit 3500 to remain active in the company, else my account gets expired.

I think I should not name the company here. And I know Company name/brand/goodwill plays a major factor in deciding whether to invest in it or not.

I need advice, should I invest? Is the probability of getting returns in network marketing good?

What are the chances that I will get a good return in investing in this network market compared to investing in some other places like SIP?

mhoran_psprep
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j4rey
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3 Answers3

48

The basic way that these "work" is this:

Every year I have to deposit 3500 to remain active in the company, else my account gets expired.

You are paying money into the system. The only way you make any money is to:

By my calculation I(or my child nodes) have to get 18 people to join to break-even my investment.

Intuitively this should tell you that:

  • The only way you make money is if more people join (who then do not make money unless they also get more people to join)
  • Everyone at the "bottom" loses money

What normally happens in this sort of thing is that people get conned/excited/tricked/whatever and sign a few of their friends up, but then quickly run out of people to bother/annoy/hassle/harass into joining and then they lose money on the whole thing.

enderland
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"if it looks like a duck, walks like a duck and quacks like a duck, then it's a duck"

This cliche is appropriate for your situation. Every aspect of this endeavor says "scam." It's a classic pyramid scheme with a product for sale that you don't even believe in. Too bad it's a friend that brought it to you.

JoeTaxpayer
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If you're selling a product of actual value, and willing to do the recruiting hustle then a Network Marketing Scheme might work out for you.

If you can't make money just selling the product, or it's not a product you'd support I would stay far away.

In the US, it is my understanding that MLM is legal if your earnings can surpass your sponsor's.

Disclaimer: I did Quixtar (Amway online) in college. But I didn't succeed because I didn't nag all my family and friends to join nor hustle the products. I have met folks who have actually done well with it, and I think without really screwing anyone else over.

Aaron McMillin
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