How the profit is formed?
Many prospective participants of high yield income projects think about where the organizers take such big money that they can regularly pay very serious interests. Incomes, surely, do not come from nothing. In serious HYIP experiences managers, professionals developing and realizing many high income projects work over the effective investment schemes.
So the main sources of incomes in High Yield Income Programs are the following:
- Investments in FOREX market.
- Trading of stock of different companies on international stock exchanges.
- Participation in different commercial sweepstakes.
- Investing into high-yield business
- Import and export of scarce goods.
That means, actually by accumulating money of the participants, the programs’ leaders use them as their floating assets. Then by investing in high-yield projects and actively using the off-shore status they create the profit not subject to taxation. As the result there are sums enough to support the HYIP activity and to pay charges to the investors, as well as to further expansion of the program.
People distant from complex economic processes may think it is unreal that over a month the amount of the investment may double or even triple. An experienced investor always may predict which investment will bring profit and which will not. Having wide knowledge and serious experience he/she is able to easily make profit from price fluctuations to some goods.
Many investors have made huge fortunes on the currencies rate fluctuations. Trader who knows the specifics of currency market over just few hours may double the invested capital. For example, trader has 100$ and he/she is going to speculate for Euro fall and long for Dollar. Trader takes 9900$ no-interest credit and sales 10000. Then he/she buys Euro at the rate 0.9755 and in a few hours resells it at the rate 0.9845. Then he/she pays off 9900 to the broker and the pure profit of the investor is 90$. So the deposit increases 90% less than in 24 hours.
Surely, for an inexperienced investor an attempt to play for currency rates fluctuations may result in financial crash. Instead of prospected profit he/she will bear significant damage. Actually, the role of all high yield income programs is to create some initial fund of money from investors’ contributions and then using various economic schemes to distribute it among profitable projects. Within HYIP there is no industrial processes, projects’ managers do not just manage your capital but help you to multiply it. HYIP is an agent between a private investor who does not have possibilities and knowledge to effectively play on the market fluctuations and high yield economic formations.
Of course, besides for the currency rate play there are many other effective methods to invest money, for example, buying securities of organizations which work well in the developing countries.
Such financial instruments are risky but the risk is compensated by their high profitability. Besides the HYIP leaders prefer to reinsure
and place the part of the invested funds into securities of the highly reliable companies.
Good HYIP will never lie to its clients because high yield income programs are an ideal example of mutually beneficial cooperation. By effective management of the investors’ capital the program organizers get enough income to pay interests to the investors and have profit on their own.
The rate of capital circulation, for example, on FOREX significantly increases the circulation rate during regular business activity. In 24 hours one can perform several high-yield transactions providing every-day or every-week payments.
However, you should not forget that the majority of projects’ organizers prefer keep information about their income sources secret, fearing unfair competition. That is why often the high yield income programs are not absolutely transparent. However, it does not influence the regularity of payment and programs trustworthiness. High Yield Income Programs’ leaders knowledge well the fact that the effectiveness of mutually beneficially cooperation are not likely to risk their investors’ trust.
Risks
For a private investor almost all options for risk-free investing are closed. That means, if someone wants to invest money and soon get high incomes from the investment, he/she will risk anyway. You can, of course, deposit your money with a bank, but the private investor rarely has enough initial capital to make a fortune out of the bank interests. That is why the only way out is to invest your money into high yield risky projects.
You should always be careful about the programs connected with risk. First of all you should do your best not to engage into false project or financial pyramid. You have to carefully study all program features and only after that start investing.
The situation gets more complicated because even the trustworthy projects fail sometimes. It happens, for example, when program leaders did not manage to promote their program right or played fair on the currency market risking all their funds.
There is a number of rules and peculiarities by studying which the private investor gets the possibility to minimize the risk. Let us consider them in more detail.
The nature of the high yield income programs is such that almost all of them terminate their activity someday. Pyramids programs fail losing all clients’ investments, serious HYIP paying off to their investors come to an end. Surely, all ‘honest’ projects are developed in a very accurate manner and designed for a maximally long functioning term. But often the closure is connected with the objective economic reasons that are very hard to eliminate.
A standard living cycle of high yield income projects comprises four stages: pay-back period, period of growth, period of saturation and descent period. Here they are in detail.
Pay-back period is the birth of the project. The creators of any HYIP invest some money into it. First of all, they are needed for creating a well-functioning and nice web-site, for content development, registration in paid rating systems and for advertisement. It all costs money and as the project does not bring any profit yet the period is always loss-making. One cannot assess the reliability of the project during this period; however, there may be some indirect signs that the project is a fraud. For example, when the web-site is hosted free of charge and all content is stolen from some other web-site, it is intended to collect money and close itself.
Growth period is the beginning of project’s functioning. During this period the investors appear who try to attract additional clients with a view to get the referral payments. At some moment the project comes over the point of self-sufficiency and starts bringing the real profit. The project success at the stage depends on the scope of methods applied for attracting the clients. A direct sign that the organizers plan to further support the program are the various strategic actions such as extra money to the account of everyone who register in the project, for example.
Period of saturation is the most stable period in HYIP functioning. During this time the investment flow has stable growth, the program brings maximal profit and clients receive their interests regularly.
Descent period is a determining stage for further program’s life. It is characterized by the fact that the users lose their interest to the project, the flow of new investments fall and the program ends its development. All false projects terminate their activity few days after they enter the descent period, they don’t pay to their clients and disappear with no trace. Creators of trustworthy programs undertake measures trying to bring their projects out of the stagnation.
Once you analyze the HYIP actions during the descent period, you can make a conclusion about the perspectives of investing into the project. If the program has passed the crisis situation, continues to work and bring profits to its investors, you can be sure in the project: it is a serious business undertaking aimed at mutually beneficial cooperation. You can learn that the project enters its descent period by analyzing its advertising dynamics. As soon as the users’ interest starts decreasing, the project organizers develop a demonstrative agitation: they write letters to the program’s participants, register in new catalogues, post messages on forums and guest books.
Of course, the investor shall do his/her best to find out the perspectives of the project before it reaches the crisis point. The successful end of the descent period may become a signal for those who wants to join the program at its new stage. What about those who plan to participate in the program from the very start? Those investors shall make a detailed analysis of the selected HYIP in the very beginning and invest their money only after they are sure of the program reliability.
HYIP: Evaluation
Before you invest money in the project you got interest in, surely you need to analyze every aspect of the program.
- Amount of regular money payments.
- Investment limits.
- Specifics of the activity.
- Trustworthiness to program organizers.
- Your impressions from the web-site.
- Domain check.
- Contract information.
- Materials and opinions on specialized forums
- Position in rating sites.
- Independent research.
Let us consider in detail every item.
First of all you need to evaluate the amounts of regular money payments, i.e. the interest from the investment capital to be paid by the administrator’s projects.
The main thing is not to get caught by promises. If the program promises you everyday doubling of the invested sum, be sure it is a fraud. The average amount of payments under serious HYIP makes up about 3-4% per day. There may be insignificant deviations. But 7-10% per day with almost no doubt indicates that the program is a ponzi scheme and the money will be paid to the investor at the expense of new members. As we have clarified earlier, such programs do not promise anything good to the private investors.
Some projects offer variable every-day profit based on the program’s incomes. As a rule, such HYIP are actually do business trying to effectively accumulate investor’s money and are not eager to lie to their investors.
The statistics shows that the most serious high-yield income projects guarantee monthly payments at the amount 10-50%. Besides, the numbers may vary depending on the specifics of the activity.
Another aspect is the investment limits. They are the limits for minimal and maximal amount of investments. It may seem the minimal bottom and no maximum for investing demonstrate the openness of the program and its desire to cooperate with the clients who have different financial abilities. However, as the practice shows the serious investment projects always determine the minimum and maximum for the investment. If there are no investment limits you should think whether it is a ponzi project; whether the organizers hope by attracting more and more investment pay interests only at their expense.
The statistics shows that the most serious high yield income programs establish the minimal limit of 25$ and strictly limit the maximum.
Almost every HYIP says about what form of economic activity will create the profit. Earlier we have given the list of the most popular sources for such investment programs and we are not going to repeat it. Let us note that if the web-site says that the program ‘is connected with the FOREX trade and other forms of business’ you should know that it is most likely to be Ponzi. The leaders of serious programs, surely, are not eager to open all details of their activity. There are many dishonest dealers in the world of on-line HYIP who are always ready to bite from somebody else’s pie. However, there are general schemes for all serious programs. The Ponzi creators rarely develop complex schemes because they won’t use them anyway. The fraudsters usually say few words that the profit is created by playing on currency exchange market. The serious projects’ leaders try in detail to explain to the investor how the money will be used but not revealing any company names, amounts of investments and trader’s names.
However, there have been cases in HYIP when Ponzi projects easily covered under the serious projects and their administrators revealed to the clients the reports about market fluctuations and information about the investments made. As the result those HYIP turned out false and their investors lost their money.
Another aspect is the trust in project organizers. You should carefully study messages the administrators leave on forums and analyze the messages. Pay attention to how much time the project organizers spent on the forum. If they say that they do business, they should lack free time. In case they are on-line on the forum from dawn till dusk you should consider whether they are fraudsters.
Your impressions from the web-site are one of the most important aspects allowing to evaluate the relations of the projects leaders to their program. Good engine, private domain and functional design, simple to use and effective feed-back means do not surely say about the honesty of the program administrators but at least indicate they are serious about the project and have invested money into it. In case the site is hosted free of charge and does not have good design, its content is stolen – it shows the administrators are not serious about the program and they did not spent any money themselves. You should think twice before investing your savings into such a project.
If the project has its own domain name, you should check it using a special ‘whois’ service (http://www.nic.com/). Here you can get to know the registration details, contact information, name and last name of a person who has registered the domain. Surely, this method cannot guarantee anything because many domains are registered anonymously and the fraudsters easily may give false information. You should carefully study the information given by ‘whois’ service and to compare it with the information you have about the project’s founders.
The more possibilities administrators of the project give to maintain the effective feedback the more trust to the project is given. The possibility to directly discuss the details and program specifics with the leaders at least proves the fact the administrators are interested in the cooperation. Besides, often the high yield income project’s leaders try to stay anonymous. In the conditions of today’s business it is rather reasonable and cannot be considered a direct sign of fraud.
Carefully study the specialized forums dedicated to the high yield income programs. As a rule, many experienced investors who have participated in many programs visit them. Especially it is important for the beginners how have just started their on-line investing. Thanks to the forums communication you can reveal serious weaknesses in the HYIP you got interested in, learn the opinion of the investors who already participate in the program. HYIP forums are rather good source of the newest and impartial information and you should not disregard it.
After analyzing information on the rating sites you may learn whether the program pays interests at that moment and how long the program exists. However, this information are less valuable than the information from forums because there are no guarantees the project that successfully pays interests today will pay them tomorrow.
Finally there is a possibility to check the HYIP by independent organizations. However, today this way is actively used by new high yield projects with a view to get additional advertisement and possibility to distinguish themselves from other programs. In order to hold the inspection the project leaders shall give their real contact information (address and phone number) after that the independent organization analyze the information and make their conclusion. Often there were cases when HYIP leaders have given false addresses (for example, address of some supermarket or parking lot) and have received the approval of the independent organizations. It happens due to the fact that many organizations just check the fact there is address like this and do not check other aspects of the business activity. In other words none of the abovementioned aspects can guarantee the fact the project is false or reliable. Only by studying them all you can make adequate evaluation.
There is a formula that helps to determine the approximate lifetime of a project.
Project’s lifetime= (SD + SH + KR) * (NO + NF + WD + GAR) * (NKI + SKW + SKR) *365 / ((KI / SV) * (KO + RT + 1) * (KS + STR)*100000)
Where
SD – approximate cost of design;
SH – cost of hosting;
KR – advertisement expenses;
NKI – presence of contact information;
SKW – compliance of the indicated contact information with the information given by ‘whois’ service;
SKR – compliance of the indicated contact information with the real addresses and phone numbers;
NF – presence of forum, quality of its development;
KO – number of mistakes in web-site’s content;
RT – deviations in text (if the content is stolen with different sites or written without giving any consideration, the text will have incompliance);
KI – dynamics of growth of investor’s number during the first week of project’s existence;
SV – sums of investments;
WD – information on business activity the program gets incomes from; subjective evaluation of data adequacy;
GAR – presence of guarantees;
KS – number of persons engaged in project’s maintenance and support;
STR – place of project’s accommodation;
NO – presence of office.
Every the abovementioned parameters has its own value and putting it into the formula we will get the approximate term of project’s life. The formula has been used many times and has shown the accuracy of calculation in about 86% of cases. A mistake in the evaluation happens when the serious owners hide their contact information because of some reasons not related with the HYIP activity.
Making the First Investment
So you have done the research needed, made a provisional assessment of the project’s reliability and are ready to invest your money. But before you invest your savings into a selected HYIP think whether you are ready to risk your capital. Will you regret the choice you made? Would it be better to spend the money on buying something good for your household? As we’ve mentioned before all high yield income programs are connected with a fair amount of risk and even once you’ve made a detailed analysis of the project you are interested in there are no guarantees that the program is reliable.
Remember the major rule in regard to HYIP: never invest all your money into one project. Develop your investment scheme for several reliable high-yield projects at the same time. Even the most serious project can unexpectedly close, not mentioning the multiple pyramids there are. Always keep an ace in the hole. Even if one of the projects gets closed you’ll have three or four other programs the profit from which may compensate the lost financial means and even bring profit.
By participating in several programs at the same time you actually insure yourself from losing money. It is very hard to imagine all programs analysis of which has shown the seriousness of the organizers’ intentions will get closed. When making your investment consider the fact the program may fail and invest in such a way that if it fails you get your income anyway. Try to minimize the risk.
In the most thorough programs the interests are sent to your account opened in an electronic payment system every 24 hours. Besides, reliable projects, as a rule, try to make an automatic reinvestment that significantly increases your profit.
It is very simple to count your provisional incomes. For example, you’ve invested some sum under 2% into an investment project for 365 days. That means, that not making any reinvestment you will have your money back in 55 days and since then you will earn profit. So when the term ends your income will be 720%. If you divide your capital into several parts and every part will be invested into different high yield income program, even in the event the half of the programs will fail or turn out to be fraud you will get profit anyway.
Remember to reinsure yourself in any case, even if you are 99% sure in the project. Even if you are promised the whole mountains of gold, even if all your friends and acquaintances recommend investing the maximum into the program – divide your capital into parts anyway and invest into different programs. Even the most honest HYIP when it does not overcome a crisis stage may fall down.
There is one more rule any beginning investor shall follow: never risk the money you are afraid to lose.
Continuing Your Investment Campaign
One more important rule for private investor says: do not invest the earned capitals into the same program. Every day for the project is a new step to its inevitable closure. As we have said before even the most reliable projects will sooner or later end their activity. When a resource of the high yield income programs exhausts, it gets closed. Constant expansion of the project is impossible. It is an axiom. That is why try to invest the earned money as effectively as possible.
As a rule, disregard of this rule is the reason for financial loses. Many private investors get ‘greedy’ and once they receive some incomes they invest it again and again. And they do it till the project spends all its capabilities. As the result the investor loses; it would be good if he manages to turn his initial investment back. Distributing the incomes among new programs is the most effective way to minimize the risk.
Study the new programs, hold their detailed analysis, select the most prospective and honest ones and then invest the parts of your gained profits into them. In case your initial program closes you will always have the investments in other programs and you will be able to turn the invested money back and gain profit. The investors’ desire to follow the old path and receive the profit in one project can be understood but it does not correspond with the economic reality. The project that sooner or later will get closed inevitably comes to an end someday. You have to do everything possible that the termination of the program brings you minimum damage.
There is no sense to turn to HYIP to those private investors who wish to get rich at no risk. High yield incomes are always connected with high risk. High yield income programs participants cannot avoid the risk, it is impossible. They shall try at their best to minimize the risk. You can minimize it only by investing your capitals into different projects.
Invest into different projects and distribute the gained profits among new programs, even when you start working with this HYIP. There is no sense for the beginners to risk all their capitals. Many programs have a fixed entrance minimum limited up to 1$, 10$ or 100$. At first understand the functioning of the high yield income programs by playing ‘small’. And only when you feel yourself comfortable in the HYIP world and learn how to invest and reinvest money right, you can start playing ‘big’.
Remember, nothing venture nothing have. However, do not forget that if you risk recklessly you can be left with nothing. Follow all private investor’s rules and you’ll succeed. A reasonable risk is the foundation for survival in the changeable and unpredictable High Yield Income Programs universe.
Golden Rules
There are several Golden Rules every participant of high yield income program shall follow. Disregard of these rules may lead to the fact that instead of the expected incomes the investor loses all his/her savings and turns out to be in debt. The Golden Rules are not just made up; they have been developed during years of participation in HYIP and are tested by the most effective method of trial and errors. Observing the Golden Rules you get a possibility to minimize the risks, maximize your profit and avoid fraud to the extent possible.
The first rule says: never waist more money than you can afford. Remember, there is sense to invest only extra money you usually spent on luxury items into high yield income projects only. Never risk the money you usually spent on first priority goods. It is very unwise to invest money into HYIP that are to pay your hosing bills. High Yield Income Projects are always risky and it is dangerous to risk the money you need to support yourself.
The second Golden Rule: don’t be greedy. Do not allow the greediness to blind you. Even if you regularly get the program’s earnings during several months it is not the reason to mortgage your house or take a credit under unbearable interest. No one can guarantee that the project well-functioning today will not be closed tomorrow. You may find yourself with nothing if you spent your money recklessly.
Do not believe the huge interest. As a rule, they show that the project is false or is a kind of pyramid. Remember, 30-50% of monthly income is a rather adequate percentage. If you are promised to be paid more than 200% of your investment, you can be sure it is fraud.
The third Golden Rule: never deal with spam. Even if the program provides huge referral payments never try to attract additional users via spam. It can only damage you and your project.
The fourth Golden Rule: keep your password information secret. The most frequent mistake of an investor-beginner is the use of one and the same password for different HYIP. So you give the offenders a possibility to get access to confidential information. It is even worse, when you use the same password in high yield projects and electronic payment systems. The offenders always collect passwords being registered in the users’ projects. After that they try to access electronic purses using them.
Creating your password think about making it hard to trace. Use the passwords containing several words containing symbols of different registers and numbers.
Finally, the fifth Rule: always analyze in detail the project you are interested in. Only by studying all aspects of the project’s activity, by checking all information and analyzing additional information you may create a provisional conclusion: whether it is a fraud or honest business. If you miss the analysis stage and ecklessly invest your money in the first project you got interested in, in the event it gets suddenly closed you would blame only yourself.
Do not disregard any of these rules. Only by observing them you may effectively minimize the risks. The investment market does not tolerate the investors who act blindly, try to play not following the simplest rules.
