As college students, juggling it all is stressful: family life, social life, school, work, and mental health. Working a part time or even full time job takes up a portion of the day that could be used for homework or unwinding. So, when some students are presented with an opportunity to make money fast with minimal work, a pyramid scheme might seem like the best method at hand.

A pyramid scheme is a model used to make money without a product being sold. It costs an initial fee to join and requires you to recruit others to join and pay a fee as well. The creator of the game will be the first to make a profit. It is known as a pyramid scheme because often the game mimics a pyramid with different layers. 

The founder or creator sits on top and recruits others to contribute a fee, which completes a full cycle. After the cycle is complete, the founder is paid out and the next person in line becomes the new participant to make a profit. But in order to continue making a profit, more recruits need to join in with the fee, ultimately continuing the same method until available participants run dry. The members at the bottom of the pyramid lose money while the ones at the top gain a profit.

The most recent popular one occurred during the earlier stages of the pandemic, though it was more of an octagon rather than a pyramid. The “octagon” splits, allowing for the first two people to be placed in the winning position. 

“The pyramid scheme required you to recruit people and the goal was for you to make it into the middle and then you would collect and get your money’s worth and more. The more people the whole group -usually seven or more- added, the closer you would move in the circle. Before you reached the center, the circle would split and you would start your inner circle,” stated an anonymous student formerly involved in a scheme. 

According to another Seawolf that would like to remain anonymous, it was hard to resist the urge to join. It was all over Snapchat and other social media platforms. 

“I saw it all over the place. Some at higher costs than others. People kept promising that it works, but it would only work if we all contributed. They really knew how to market it, too. They would post stuff about the pandemic being hard and making a little extra to help out the family. Some would post screenshots of their accounts or just cash that they had made. They called it an investment. It seemed like really easy money.”

Another Seawolf who would like to remain anonymous voiced how it was hard to resist joining, “I began to see that people I knew were winning money and then people began to reach out to me. I gave in and that was my biggest mistake, I let others persuade me to join.”

Not only do most people lose in these schemes, participating in or creating one is illegal. It is best to just sit on the sidelines and watch it all unfold. If a method of making money asks for a starting fee or is marketing to the individual to join, most of the time it is either a scam, or the possibility of making a profit is slim to none. 

“My biggest take away is to not trust what you see on social media and to not give into things easily. I learned to be vigilant when scrolling through social media and to not let others, whether I know them or not, convince me of something I have knowledge about,” stated another anonymous student.

Better ways to invest money can be done so through trading stocks. A recommended book for those looking for more information is “The Intelligent Investor” by Benjamin Graham. 

Some common tips are to always research and resist buying  into things that are already popular, such as AMC Entertainment, without reading up on the reason for the popularity. Buying stock low and selling high, or holding, also helps. Holding allows one to see the performance of the stock in order to continue holding, buy more, recuperate a loss, or simply decide it is not worth it. It is also recommended to never use money that will be needed for crucial expenses, instead use money that one is comfortable losing. 

Index funds like the S&P 500(SPY) tend to be safer as the return rate tends to be pretty constant. In this case SPY tracks 500 companies, meaning that some of the companies might fall as others might rise. The gains and losses balance either out since it is a multitude of companies instead of just investing in solely one company. Therefore it makes it a lower risk stock, essentially putting your eggs in many baskets instead of one.

Ultimately, if a financial endeavor requires someone to provide money upfront or utilizes a form of marketing to get someone to join, it is normal to feel unsure of it. Amble research should be done, a quick google search or testimonials even. This in efforts to mitigate risk and prevent others from falling into a financial trap.