Many people dream of finding a quick way to make money, especially when they are young and just starting out. But Zerodha founder Nithin Kamath says chasing easy money can sometimes lead people into dangerous traps.
In a recent post on X, Kamath shared a personal story from his early career, revealing that he was involved in a multi-level marketing company that later turned out to be a pyramid scheme. His comments came after watching Pyramid Scheme, a series on Prime Video that reminded him of that difficult phase in his life.
Kamath said that when he started his career at around 18 years of age, he was looking for ways to fund his trading account. During that period, he became involved with a multi-level marketing business and remained associated with it for nearly two years.
Reflecting on the experience, he wrote, “When I started my career at about 18, I was trying to find ways to fund my trading account. For about two years, I got drawn into a multilevel marketing company that turned out to be a pyramid scheme.”
He added that he did not believe the person who introduced him to the business had intentionally misled him. Instead, he felt the company itself had deceived many participants.
The experience was especially difficult because he had also introduced several other people to the scheme.
A pyramid scheme is a business model where people earn money mainly by recruiting others rather than selling a genuine product or service.
Typically, such schemes promise high returns in a short period, focus heavily on bringing in new members and offer little or no real product or service.
Most pyramid schemes eventually collapse, leaving the majority of participants with financial losses. Well-known examples include QNet and SpeakAsia.
One of the biggest surprises for Kamath was discovering that pyramid schemes continue to thrive in India even today.
“I thought this was something that only happened in the early 2000s. I didn’t realise that even today, 2 new pyramid schemes launch every day in India,” he wrote.
According to figures cited by Kamath, more than 5.5 crore Indians have lost their savings to over 5,300 such schemes. The estimated losses stood at around Rs 10 lakh crore as of 2015, and he suggested that the actual figure could be much higher now.
Drawing from his own experience, Kamath stressed that there is no guaranteed shortcut to becoming wealthy.
“One truth my experience has taught me: there is no quick way to make a lot of money, be it trading or any other business,” he wrote.
He warned that any investment or business opportunity promising unusually high returns should be approached with caution.
“Anything promising returns higher than a bank FD comes with risk. The higher the claim, the greater the risk.”
Kamath also connected the issue to the growing participation of retail investors in the stock market. He said many people are being led to believe that making money in stocks is easy, which can create unrealistic expectations.
“This dynamic has also played a big part in the recent growth of retail markets, people spreading the word that it’s easy to make money in stocks. It isn’t, and the reckoning tends to come quietly, one account at a time.”
His comments serve as a reminder that investing requires patience, knowledge and an understanding of risk.
Kamath ended his post with a strong warning about schemes that reward people for recruiting others.
“And if someone tells you that you can make easy money just by introducing others, run. Almost every single one of those is a fraud.”
The message resonates at a time when social media, online platforms and messaging apps have made it easier than ever for fraudulent schemes to reach large numbers of people.