How HYIP works?
A High Yield Investment Program, also referred to as HYIP, can be a risky venture if you aren’t careful. So it pays to do your homework and learn about HYIP’s, how they work, and where you can find good ones if you are seriously considering investing in one.Let us take a closer look at how a High Yield Investment program works. Be warned though, this is what makes them illegal in some countries, such as the USA. Someone creates a HYIP site, making them the owner. They then look to bring “investors” in by promising a tantalizing rate of return on their initial investment. This can be anywhere from 1%-2% daily or as high as 100%-200%. This sounds ridiculous and you may be thinking “That’s impossible!”. But HYIP owners rely on the greed, laziness, and ingenuity of others and there are many out there who will go for this.
Let’s say 10 people decide to join/invest. They invest $100.00 each. This means that the HYIP owner now has $1000.00 which he may or may not invest in other High Yield projects. As the site sits there and “matures” it may pull in more views, in turn getting more people to join. So let’s say that another 20 people join with $100.00 investments each. That’s another $2000.00 that the owner now has, making it $3000.00 in total. At this point the owner now has the amount to pay the first 10 people whatever rate was promised.
He takes $2000.00 to use to pay those 10 people, and from their $100.00 they received a return of $200.00. Because they have seen a return they feel they have found a legitimate investment that works. So they start to recommend this to others, showing proof of the payment they received and spreading word to more and more people. Many will even reinvest, hoping they can compound more on their investment.
The owner starts to receive many new subscribers paying in their investments which allows the owner to pay the 20 members that came in after the first 10. So those 20 are excited about making money and will further spread the news, bringing more and more people in. At some point the HYIP owner has reached the sum of money he was after.
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How an HYIP owner benefits
First let us look at how HYIP site owners benefit. The owner of the investment program will take the funds invested by the joiners and invest these in some high yield projects in some cases. Because the owner is classed as being “off shore” they are not hit with taxes, so make taxless profits. By doing so they are able to build up enough money to keep the HYIP going as well as being able to pay interest to the people who invested.
You do need to be careful however because only 15% of HYIPs are true money earning programs. The rest are what they call “Ponzi” schemes. A Ponzi scheme makes no actual investment from the money of other investors. Rather, they rely on the principal that new investors will join and that will pay the first level of investors. From there, more investors will join, and so on and so forth. So they work off the hope that there will be an increase of continuous investments, and all payments are used from new investors funds. In a Ponzi scheme it will get to a point where the level of new investors are not sufficient to pay the interest of the previous investors. Or, in some cases, investments stop completely and the project shuts down, leaving the most recent investors at a loss.
How do investors benefit from a HYIP?
Now let’s look at this from the investor’s side. Say you sign up on this particular HYIP website and open an account using an international EPS (Electronic Payment System) such as Perfect money or Liberty Reserve. You use this EPS account to invest your money (from $10.00 and up). From the very next day you start to see a predefined amount of profit entering your account. Interest can be paid daily, weekly, or monthly, or sometimes at the close of the predetermined deposit term of the principle amount. You will see that the percentage fluctuates from day to day between 0.3%-3%, or 9%-60% per month. In a fairly short amount of time you are compensated for your initial investment and will start receiving a net profit over that.
There are sites out there who do monitor HYIP sites which will allow you, as an investor, to find information about each HYIP site including payments and issues. But even monitoring sites will place erroneous info up on projects which are scams, giving the scammers a higher rating or listing them as “paying”. This can result in investors putting money into a closed project. This is why it is best to check different sources before thinking about investing. Some of the more popular sites are www.moneymakergroup.com and www.talkgold.com
Is it worth investing in these HYIPs? Any kind of business is going to have some risks involved. And HYIPs are a risky venture if you don’t do a bit of homework and find the right one. Because it allows you to buy in with a low amount of money, many people will opt for this as it is a quicker way than investing in lower risk investment opportunities. If you go into it expecting a loss of income, or invest money that you can afford to lose if things go bad, you won’t be faced with too big a disappointment.