Introduction
The term High Yield Investment Products (HYIPs) is used to denote non-traditional investment products that promise much higher returns than traditional ones, such as stocks, bonds, and real estate (I don’t really think of fixed deposits or CDs as investments).
HYIPs typically earn their profits from FOREX, futures, options, arbitrage, and real estate trading. These are areas where tremendous leverage gives rise to the potential for high returns.
With the proliferation of the Internet as a medium for advertising, communication, and business, many HYIP sites have emerged. The returns are incredible – some promising 5% daily! Compare this to the returns on a bank deposit of 5% per year and you can see its appeal.
The seedy world of HYIP
Unfortunately, the HYIP world is riddled with scams. The anonymous and global nature of the Internet has made it easy for anyone to simply set up a website and fleece unsuspecting people who are buying hopes of wealth or financial freedom. A HYIP expert I know estimates this scam rate to be 95%. In other words, you must kiss 19 frogs before you find your prince.
Many HYIPs are a play on the old Ponzi and Pyramid schemes. As long as they are paying, people get excited and invite friends and family to put up more money. The power of word of mouth marketing is the strongest in the world and should not be underestimated. If the HYIP trader can get the money in faster than the money you pay out, the program will continue to make a lot of money for them as they take the percentage. In fact, even those who got there early will also benefit, some enormously. All of this adds to the emotional hype surrounding the HYIP.
However, once the flow of money can no longer be sustained due to the operation of mathematical laws, they simply back off and move on. The losers (those who come later, drawn by the hype and emotional draws) are allowed to lick their wounds.
Invest in HYIP?
Interestingly, if the scam rate is 95%, it means that there are 5% with real programs that are paying money regularly, for a long time. So how do we invest in HYIPs without killing ourselves?
I offer this 5 point system to invest in HYIP.
Aim for cash flow instead of compounding. HYIPs come and go, and the winning attitude to adopt should be guerrilla tactics instead of taking the ground and fighting. Take out as much money as possible, as soon as possible, until you have recovered your investment; the rest is then free money for you.
go small. Put no more than USD100 at a time. In fact, there are those who advocate even USD10, if the programs do not have minimum expenses (investment). Spread your investment across many programs and expect many of them to fail. This expectation will make things easier for you emotionally.
Take a look at the website. It must be on your own domain (not a free domain) and it must look professional. Try looking for those with a forum so you can check how well the admin is responsive to those they serve. Take a look at the operators and administrators of the programs (also called administrator). They should be easily contacted. A proper email (not free emails like Hotmail) must be available and the response must be quick.
Beware of HYIPs that use referral programs to entice people to join. Experience has shown that referral programs are a big warning sign for ‘Ponzi’! Also beware of HYIPs that promise more than 20% per month. Such programs are extremely difficult to sustain.
Programs that have been around for more than a year are usually good programs to join. However, they are also extremely rare. It is easy to check how long the website has been in operation by visiting www.whois.com. However, you should be aware that a website may register first before it is operational. However, few scammers are going to wait that long.
Conclution
I trust that the information presented on this page has been useful to you. You may want to contact me if you have any further questions.