HYIPs are programs which pool together the funds of their members
to take advantage of investment opportunities, like stock trading
and foreign exchange (FOREX) trading among others. These HYIPs
attract funds from members (known as "deposits" or "principal") by
promising high rates of interest payments, which explain why they
are termed "High Yield Investment Programs". Naturally, the higher
the promised interest rate, the higher the risk borne by the members.
This is due to the fact that HYIPs pay off their members from the
returns on their own investments. Therefore, it is possible for the
payouts to exceed the HYIP's own returns, especially when the rate
of interest payment is high. If such a situation persists, the
closure of the program would be inevitable and members will stand
to lose their principals.
Scams
A scam is a fraudulent business scheme and this is rampant among
HYIPs. Some HYIP owners abuse the trust of their members by
misrepresenting to them about their investment strategy, when they
have NONE. Consequently, they will eventually run out of money to
pay their members and most of them just disappear into cyberspace,
along with members' hard earned money. Therefore, we hope to
educate readers by offering our humble advices on minimizing the
possibility of being cheated.
Ponzi Schemes
This is named after Charles Ponzi, an Italian who migrated to
the United States and became one of the greatest swindlers in
American history. His aliases include Charles Ponei, Charles P.
Bianchi, and Carlo. By paying off initial investors with money
obtained from the later investors, Charles Ponzi managed to
swindle $15 million from 40,000 investors from 1919 to 1920.
This is how the term "Ponzi Scheme" was coined. You should be
aware of the fact that some HYIPs are actually pure Ponzi Schemes.
My Advice
1. Never join any HYIP that pays more than 3% interest daily as
it is next to impossible to afford such a high payout on a regular basis.
2. Always do a Due Diligence check on the program.
3. Listen to what fellow investors have to say about the program
in the various hyip forums. Check if it has been paying its members.
4. Diversify your funds by making deposits in several reliable
programs. This reduces the risk of loss you are bearing. Even if
one program shuts down, you still have other programs as back-ups
for you to recoup your losses from.
5. Determine the coherency of the program's investment strategy.
See if the owners know what they are talking about and if they have
a sound business plan.
6. It is not advisable to join a program that uses poor language
on its website. If the program has thousands of dollars of deposits,
they should be able to afford to spend a few hundred to hire a
professional publicist, or at least someone with a decent command
of English to instill confidence among investors.
7. Just because the program is paying does not mean they will
continue to. Decide for yourself how long more the program can
sustain and whether it is likely for you to make a profit.
8. Always read the FAQs and the terms of payment carefully.
You may discover some terms which may put you in a very unfavourable
position.
9. Invest only what you are prepared to lose. Expect the worst
but hope for the best. Be conservative when calculating your profits.
Do a scenario analysis. This will put you in the correct frame of
mind when deciding the amount to deposit with a program.
10. Do not compound your interest until you have earned your deposit
back. This reduces the likelihood of you losing money as some
programs do not survive for long, especially those without sound
business plans.
For searching new HYIPs always use any good
HYIP monitor
like http://www.thehyips.info/. This information prevents you from SCAM.
HYIP investment expert Sergey Kolontay, he teaches how to right to investment
in HYIP. To learn more about HYIP programs subscribe to his weekly newsletter
on http://www.thehyips.info/
