Why did people lose money with FNI?

Let’s see what FNI means and what it was. For the lucky ones who don’t know and who didn’t lose money with FNI, I will specify what it represented and I will put on the table a psychological aspect that determined several hundred thousand people to have an unhappy moment in their lives.

FNI is the abbreviation for the National Investment Fund that collected and managed mutual funds. It promoted obtaining high profits on the money saved by depositors. In other words, an administrator who had a large amount of money offered to set up this mutual fund to collect people’s money with the promise of doubling their invested amounts in a short time. People, not knowing how to invest their saved money, offered the mutual fund their money with the aim of getting rich.

Good! All well and good so far. I have explained, briefly, what the FNI represented. But the purpose of the article is to find out why it was very predictable that all people would lose their money and why over three hundred thousand people ultimately lost their money.

Two similar concepts, different philosophies

Do you remember the article with the anchor? If not, for a better understanding of the concept, you can read here: https://psihologiabanilor.ro/care-este-ancora-ta/. The anchor, in this case, represents the IMF. Do you know what the IMF is? Let me briefly explain what the IMF is and conclude, together, the existence of this anchor.

IMF is the abbreviation for the International Monetary Fund, an international organization established in 1944 by the Bretton Woods Treaty, in which 188 member states are present and whose main purpose is to promote a healthy economy, namely: international monetary cooperation and secondarily guaranteeing global financial stability, facilitating international trade, contributing to a high level of employment and combating poverty.

Did you find similarities between the two?

The INF’s marketing strategy was an anchor. Look at how it was used: the INF created in the human mind the guarantor of stability through an assimilation of the name. The IMF is still a safe, reliable institution. What’s different? N. A simple letter. This led people to invest in something that was actually not possible: getting rich quickly.

A golden rule of economics says that if you have little money, you wait longer to have a large amount of money, because money and time are two resources that are interdependent.

What was FNI doing? It was promising money without respecting this golden rule of economics. It’s like putting water in the freezer and waiting for it to boil. And many people waited for it to boil. Or the reverse analogy: you put water in the freezer and wait for it to freeze. And, thus, many people got fried.

The letter N created this trust. The anchor created comes against the background of contextualization, as I think you have realized. When the human brain reads a word, it pays attention to the first and last letters in the word and reads it correctly, although between the two extremes there may be reversed, misspelled letters. ̓“Srpe exelmpu, nu cnteoaza în ce odrine arap leiterle”. Our brain is able to read all words correctly, although by focusing our attention on all the letters within the words we identify that they are not written in the correct alignment. The same happens with the numbers appearing within the words. “M1N73A N0ASTRĂ P0A73 C171 S1 AC3S73 CUV1N73”, without giving us any trouble (study led by Marta Kutas, director of the Center for the Study of Language at the University of California, San Diego).

The Psychology of Money

The biggest “scam” had a very good reasoning. Due to the lack of information on the financial market and investment products, but also on the rules of psychology, people went, out of the desire to win, on a pyramid scheme, as the FNI is known to the general public. The result was the loss of money. Many people gave away their life savings. But it was all psychological engineering. As you could see, it was all a very good fabrication of psychological concepts.

Psychological concepts are used in marketing campaigns. But it is very good, in the financial field, in order not to be fooled, to know the basic information on the market. There is some generic information that everyone should know. All of these are used by renowned investors to build their wealth:

Time and money are interdependent. If we have little money, we must invest it over a long period to obtain a high profit.
Financial instruments such as bonds and government securities do not offer interest rates higher than 4% per year in our country. Shares (parts of companies) generate a higher profit, but an annual average is 8% / year. Shares are the ones that generate most of the profit, however, their fluctuations are high and it is necessary for the invested money to remain in the account between 8 and 10 years.
Apart from a business, investments cannot generate a profit higher than the percentage offered by financial instruments.
Profitable investments, with moderate risk, include financial instruments with a long history on the market. The certainty that you will not lose your money is represented by the seniority of the respective instrument on the financial market.
Never lose money. For some investors, this is the first and most important rule in investing.
Investment should have as many safety nets as possible. Investment companies should have, as much as possible, companies that continue their clients’ investment and participate in the Guarantee Fund.

To get rich, it is necessary to know some information, learn or talk to a financial expert. Greed, the desire for quick wealth causes huge losses.

The more we know about money: how it works and about us: how we function as human beings and our psyche, such unpleasant situations will not happen again. Please do not allow such a situation to happen again. It is very important to educate yourself. First of all, to be open to the information you receive and to seek its justification, so that the information beats the emotion.

Very careful also in terms of how to approach everything that concerns financial action. After such a situation, many people, even if they have not lost their money or someone close to them, do not invest anymore, they no longer want to keep their money in the bank. This approach, at its extreme, is not desirable either. The reverse of the coin is also not desirable; that due to an unfortunate event they do not invest and, as such, cannot support themselves in retirement because the money saved will only be enough for a minimum of medicine and food.

Unfortunate events like the FNI fraudulent investment will not happen again. Such pyramid schemes are no longer allowed in the market. A.S.F. was created. (Financial Supervisory Authority) which supervises all financial actions.

However, it is necessary to remain active: to read, to inform yourself and to maintain a dose of realism, without being skeptical at every step, at every financial decision you make.

I wish you and those around you increased financial education and success in becoming aware of money (the most precious resource in a person’s life)!