What are HYIP or High Yield Investment Programs?
What is an HYIP?
An HYIP (High Yield Investment Program) is an online investment program that typically offers very high returns on the capital invested. The returns are so high — sometimes reaching 100% return on investment in just one day — that most of them are obvious scams.
Majority of these schemes operate as Ponzi investments, which means profits of earlier investments are paid using money from new investors. Once new investments declined, earlier investors cannot be paid anymore and eventually the program folds up.
Genuine high-yield programs do exist. Some examples would be hedge fund trading, speculative stock trading, property flipping and high-margin forex trading, among others. Very few (if not all) of these, however, do not guarantee a fixed rate of return and do not promise preservation of capital. At the same time, these legal high-yielding investments cannot and do not assure investors of consistent and stable profits every time.
In contrast, HYIP investing is almost always the same as gambling. You are betting on chance, not on an asset or investment — despite typical claims of HYIP owners that money is actually invested in some asset. Like Ponzi schemes, HYIPs rely on new investments and the moment new investments cannot anymore pay for profits of earlier investments, the HYIP disappear just like that.
If you insist on investing in these types of programs, we’d like you to remember the following things which we ourselves have discovered when we tried venturing into the scammy world of HYIP investing.
High Yield means High Risk. Most people are aware only of the “High Yield” part of HYIPs, but as we all know, return is correlated with risk. Simply stated: the higher the return, the higher the possibility of loss. That means if you invest in HYIPs with the promise of uber-high returns, be aware that you can end up losing all the money you invested there.
99% of HYIPs are scams. Don’t easily be fooled by every HYIP offer you see online. Continuous payment of profits and praises from investors are not guarantees that the program will continue to operate indefinitely. Conduct online and offline research and investigate the program. A simple Google research could show you that the program may have already scammer other people. Do not be the next victim.
Invest only what you can afford to lose. Since you can lose everything in HYIP, do not ever, ever, ever (have we pointed that out clearly?) invest any amount you are not prepared to lose. In the same way that you won’t go to a casino to bet all your money, do not “gamble” in HYIPs with the money for your house rent, child’s allowance, or groceries.
Do not trust everything you see or hear about the HYIP program. Some forums and rating sites that promote the program are paid by the owners, which means you won’t normally get objective opinion from them. Exercise utmost prudence and diligence before investing.
HYIP investing is not for everyone. We DO NOT recommend it, especially to people who are unaware of the high risk it entails. But if you insist on taking the plunge, drop by the PMT Forum to ask members their thoughts and opinions about it.
- 7 Tips on Online and HYIP Investing
- Is FrancSwiss a scam?
- 3 Types of HYIP Investors
- Top Scams that became popular in the Philippines