What are High Yield Investments?

High Yield Investment Programs (HYIPs) are a fact of life on the Internet. There are hundreds of them out there, and they are very easy to find. Most are extremely questionable, and best avoided, and most people with any sense will steer clear of them! But there are a few notable exceptions! - These are well founded and capable of producing outstanding profit levels which leave conventional investments for dead if one can distinguish the good from the bad, and then manage the process to reach its full potential.

 

Should you become involved with HYIPs?

The answer to that question depends very much on what kind of a person you are! And since we know that about 95% of people who become involved in HYIPs never make significant profits, and many lose most of their money, it's a very significant question! - But, this gloomy prospect should not inspire fear, as there are tried and tested methods of ensuring that you can position yourself amongst the winners if you can follow a disciplined and methodical pathway!

The problem is that the whole HYIP 'industry' is driven by GREED! Investors are encouraged to be greedy by massive quantities of hyped up advertising offering impossible returns, so as to deliberately separate the unwary from their money - and many HYIP schemes, which may start out to be honest and legitimate, will themselves become corrupted and succumb to the greedy over optimism of their proprietors - and will take their investors money with them when they fail.

And, of course the fact that there is such a massive moving population of scams and ponzi schemes within the HYIP field, constantly churning and regenerating themselves, is due entirely to a similarly massive population of greedy, and maybe fairly stupid, investors who pour money into them. - They feed on each other! Just remember: The most common cause of HYIP grief is GREED! Closely related to greed are the tendencies to UNREALITY and IMPATIENCE! - For some reason it seems that many otherwise rational people see the HYIP field as a place in which commercial and financial realities are mysteriously suspended. - They are wrong! The simple fact is that in order for any investment, anywhere, to yield a profit, there must be the capacity for earnings to cover both pay-outs and inevitable expenses, plus reasonable profits for those who are running the enterprise. Yet, the HYIP field is full of offers which imply earning rates, and clock-like precision, which would obviously not be achievable by the best business people and organizations which the World has ever known!

By the same token, the other major area of unreality is the notion that EVERYTHING IS EASY, and requires no active management effort on your part! - The proposition being that you can just sit back and let the money roll in! Sorry folks! - But that's wrong too! If these things worked, the World would be full of millionaires! But it isn't, because they don't! - So, don't be hoodwinked!

Much of this article is dedicated to steering you away from greed, unreality, and sloppy management attitudes and practices, so if you are prepared to accept that guidance there is every prospect of astounding levels of success, but if you won't or can't follow our paths you are in the 95% losers category, and the best thing you can do is click out of this article right now! Forget it, and do something else!

What should you expect from HYIPs on the Internet?

HYIPs are a category of investment which is free of the usual controls and constraints of 'conventional' investments, consequently they are inherently more risky, but also offer higher returns. Unbridled 'market forces' rule, with almost no restrictions upon the competence or veracity of HYIP proponents! Many are blatantly dishonest, others are well meaning but incompetent, but others are honest business people who have the same shared interest in the success and longevity of their business as their clients, and exercise their considerable skills to produce excellent outcomes. These are the ones which we seek to identify and nurture!

 

In these respects the HYIP field is probably not much different from the World at large, even though the speed and spread of communication via the Internet may tend to amplify the extremes. Especially any 'bad news' which is going round! As with Life in general, if something looks too good to be true, it probably is! - And in HYIPland there is an overwhelming preponderance of 'fast buck' schemes, which gives the field a very bad name amongst those who have nothing more than a passing acquaintance with these unfortunate elements.

 

There is however a growing body of astute investors who know how to avoid the traps, and how to 'work the system', and use our facilities to assist them to do so. - They are making regular and sustainable profits which may be several times higher than the common experience of 'conventional' investors in the general realms of commerce, finance and industry. They avoid the craziness of the general HYIP scene and concentrate on managing just a few HYIPs to achieve real profits in the range of 5% to 20% per month - with a suggested target of about 12.5% per month. - And you might like to compare that with the interest rates which you can expect from your Bank or other 'conventional' financial institutions or funds! - You would be lucky to find anything offering that kind of interest rate per Year, let alone per Month! - The contrast is obvious, which many may see as being worth some extra level of 'carefully controlled risk', for at least a 'discretionary' portion of their investment pool!

How much should you invest in HYIPs on the Internet?

Here again, it is a personal matter, and there is no 'one size fits all' answer! The first point which must be made is that you are dealing with matters which involve significant financial risk! So, about the only absolute piece of advice which we will give is this:

YOU MUST NEVER INVEST MORE THAN YOU CAN AFFORD TO LOSE!

That is fundamental and invariable! - Then, from that starting point, it is a matter of deciding your personal objectives (and even whims), in the context of your own financial position. There will be as many 'answers' as there are people reading this article, so the best we can do is give a few thought provoking examples and scenarios. - And then leave it to your own initiative and good sense.

Case 1 - Building up from virtually nothing.
Some people have the idea of starting with $1 as a one-time investment and using the 'power of compounding' to build a fortune - and a lot of HYIPs encourage this notion! This is a nice theory, but it rarely works, as initial (hidden) costs, and the need for constant monitoring and manipulation of funds, outweigh profit in the early stages, and it soon reveals itself as an exercise in futility! - This is 'tire kicking' not investing! - Small investment amounts of this order would need to be repeated as a continuing stream in the early stages (see Case 2) or need to have a value of at least $100 to $200 to start to make any real sense as a one-time investment!

Case 2 - Progressive small investments.
A continuous stream of fairly small weekly or monthly investments can work remarkably well, and are usually within the capacity of anyone who is really serious! (If not! - Don't even start!) Illustration: One person recently gave up a $50/week smoking habit, and decided to invest about half of that saving in HYIPs (he probably spends the rest on chocolates!), and has chosen a 12.5% per month goal for his $100/month investments, on the basis that even if he lost the lot he is still better off! After six months of contributions and compounding his total HYIP investment stands at $925, and at the end of the year he plans to pull out the $1200 which he has contributed, to buy a new TV for cash, and he will still have $1600 left in his diversified investment accounts to kick things off in the second year - and he's planning to finance a family vacation at the end of that year! (And probably will buy a lot more high quality chocolates!). This is an example of a realistic, modest, planned approach.

Case 3 - Fast pay-back, followed by Zero Risk Income & Growth.
Another widely used ploy is to invest even quite small amounts in a diverse range of, say 6 to 10 relatively high yielding HYIPs, and withdraw profits as quickly as possible! - Then, immediately after full recovery, switch to a '50:50 Withdraw: Re-invest' mode, so that no matter what happens, after a few months a loss becomes impossible and profit is inevitable! And a variation on this is to progressively migrate accumulated profits from the higher risk HYIPs to the more secure investments. By doing this, you get the faster (but relatively risky) growth in the early days (protected by diversity!), but progressively move towards a more solid and stable pattern of simultaneous 'growth' and 'income' for the longer term.

Case 4 - The 'Limited Partial Risk' approach.
We will never suggest HYIPs as the only source of your income! But, they can certainly add a substantial boost to your profitability when used in combination with other investments!

Example: Let's say you have $10,000 in solid conventional investments, yielding a flat profit of 10%, or $1000, per year. If you took out $1000, and invested it at 12.5% per month (cumulative) in a diverse portfolio of HYIPs, then this would be the picture:- At the end of the year, you would have made $900 on your remaining conventional investments (10% of $9000), plus over $3100 from your HYIPs. That's $4000 net profit instead of $1000! - And even if 7 out of 10 of your HYIPs had failed completely, you would still make more than your $1000 target over the full year! By this means you are effectively 'playing off' the risk by maintaining a solid core of security - and if you also incorporated the 'progression towards security' technique outlined in 'Case 3' into this plan, then so much the better!

Case 5 - The 'Play Money' approach.
A very healthy approach is to view HYIPs as a potentially lucrative game! - And of course, follow the never invest more than you can afford to lose rule - and regard your investments as play money! Thus, HYIPs become an entertainment, and provide the same challenges as other forms of games and gambling, to enhance your Life Style with a new set of interests based upon good luck and good judgment, or by pitting your wits against the logic and randomness of mind games and puzzles. It does all of us good to have something which we don't take too seriously! - And through 'games', you often develop the knowledge and skills to move into a more professional relationship with the subject! - You could even regard it as a 'training course'! And if you can make money while you are at it, then so much the better!

These have been a few thoughts which barely scratch the surface, but perhaps they can be mixed and matched to trigger off your own thoughts in considering whether to become involved in HYIPs.

What Profit Levels should you expect from HYIPs?

Without too much trouble, you will be able to find many HYIPs which will offer to pay you anything from say 10% up to 150% per day for some period of time - and it would be pleasant to think that that was a reasonable expectation - just because they say it is! That would be a mistake, as such offers have a well established record of disappearing within a few days, so that a few people may get their money back, and some will even make a profit, but most will make a 100% loss! - And if you habitually invest in such schemes, you will find that you quickly fall into the 'total loss' category, too, even if you survive the first few attempts! - This is no way to live! - It's a very slippery slope! - So, stop even thinking about it, and let's take a stroll through some alternative scenarios.

At the other extreme, organizations like your Bank, can confidently offer something like 5% to 10% per year, and hedge themselves around with all sorts of protections and guarantees - and you can confidently expect the specified outcome with total confidence! - But that's not 'High Yield', and it's going to take a very long time to get rich! So, let's look for something in the middle - say 1% profit per day (30% simple, or 34.8% compounding per month).! Many HYIPs operate at this level, and have done for months, even years - and lots of their investors are well into net profits! This is looking better! - And you will find participants boasting about how happy and clever they are all over the HYIP Forums!

The problem is that there are very few trading opportunities which will sustain this regular level of payments out there in the Real World! - And such levels of regular profitability on an invariable pay-out schedule are over optimistic and consequently very chancy, indeed! - This kind of program could fail at any minute! (And we could name hundreds which have gone without warning!). A common solution may be to find 5 to 10 such programs and diversify, or spread your investments across all of them! - That way, any single failure can be made up by profits from the others in a couple of weeks. So you would not be hurt too badly! You would in fact turn a disaster into only a minor setback! - Theoretically!!

But, wouldn't it be a good idea to reduce the risk by reducing your profit target, so that the incidence of even these setbacks is reduced!? - If you agree, you might go down to a 0.5% per day target, (15% simple, or 15.15% compounding per month) to stabilize matters. - And better still, while you are at it, you might look for a variety of different types of programs, which produce that 0.5% target profit as an average, when you apportion the spread of your investments among them. This greatly minimizes danger! And you can of course keep doing these reductions, until you work your way right back to 'Bank interest'! (Which defeats the objective!) - So, where do you draw the line?

This is getting to be complex, but it illustrates two important points:

- There is an optimum level of 'target profit', or a balance point, somewhere between the two extremes.
- Selecting HYIPs and diversifying investments is necessary, but it's not easy, and requires skill and experience, or a lot of expensive and time consuming experimentation, to do it properly!

 

The balance point lies somewhere in the range of 5% to 15% Profit per Month. To many, this will seem lower than they expected in the context of High Yield Investments!? (Especially if they have been influenced by all the nonsensical hype!) - But, that's what happens when you allow reality to intrude into your dreams! We make no apology for this, beyond pointing out once again that it's about 20 to 30 times as large as common 'conventional' interest rates!

So, what can you do with 12.5% Profit per Month?

Case 1 - Fastest possible return!
Clearly, if you pull out your Profits as quickly as you can, your original outlay will be back in your pocket in 8 months, and your Investment will still be running - so, from then on it will be impossible to lose! - This is the safest way to go, and is probably a good idea for any HYIP about which you have less than complete confidence. The disadvantage is of course that you are not participating in the advantages of compounding - but you may think that is a reasonable price to pay!

Case 2 - Full Compounding for maximum Growth.
This is the opposite to Case 1 - in which you recycle all of your Profits so as to increase your funding continuously. In this case, the value of your Investment Account would double every 6 months, which represents the maximum growth rate. Thus, you could anticipate a $1000 investment to turn into $4000 after 1 year, $16000 after 2 years, $64000 after 3 years, etc. But, the money is never actually in your hands during this process! It is simply an electronic record in somebody's computer! These big numbers may be very comforting, but they can disappear entirely at the stroke of a computer key! (And it's no fun for that to happen a couple of days before you were going to make a withdrawal!!) So, maximum growth goes with minimum security! - And you need to have the utmost faith in a HYIP to ever sensibly contemplate Full Compounding over anything but a short period!

Case 3 - Partial Compounding, a good Compromise.
An intermediate strategy is to water down 'Case 2' so that each 'payday' you withdraw 50% of your Profit, and reinvest the other 50%. - Thus you get 'real money' flowing into your pocket, and a substantial level of growth - both at the same time. The picture relating to your $1000 Investment would be more complex in this case, but after 1 year you would have $2070 in your Investment Account, and you would have withdrawn $1070 in cash over the course of the year. - And of course, you can choose ratios other than the 50:50 withdrawal:reinvest regime to suit yourself.

 

Case 4 - Is 'Case 1', switching to 'Case 3'. (Touched upon earlier).
An extremely popular and very sensible ploy is to combine 'Case 1' to recover your money first - then switch to 'Case 3' for further Growth plus Income. - The best of all possible worlds!! Please reread this section! - And if you can't find something satisfactory, then you are just being too GREEDY! - So, take yourself aside, and give yourself a good talking to!! And tell yourself to "GET REAL!"

Setting your Strategy

Engagement in the HYIP field is a bit like running along the ocean's edge without getting your feet wet. What we are trying to do here is to maximize returns by selecting investment paths in which the risk/benefit characteristic is close to the edge, so as to produce maximum Profit - without falling into the ocean of scams, and Ponzi schemes, and over-optimistic incompetence, which are crashing in around us at all times. - And it's not easy! There are four elements to consider:

These elements are not mutually exclusive or self contained, but interact substantially, change continuously, and need to be 'juggled' to meet our need for a coherent portfolio of investments which meets our overall aims. For example, it would be futile to 'select' a list of programs which are all essentially similar, as that would fail to produce the 'diversity' which is absolutely essential to our aims. Similarly, withdrawal or re-investment of accumulated profits during a 'management review' will always bring about a need to reset the 'apportionment' of the remaining 'investment pool', etc.

For the sake of this article, we will discuss the above elements separately, but it should always be born in mind that unlike the fairly slap-happy 'patchwork' approach which is almost universally adopted by individual HYIP investors, we are always using a 'total portfolio' approach in the tricky business of 'running along the edge', so as to produce optimum (not necessarily perfect!) outcomes.

HYIP Program Selection

There are hundreds of HYIPs on the Internet. Most of them will turn out badly. In fact most are constructively dishonest and only exist to run off with your money! Truly!! - Others are just plain incompetent or over optimistic and fool themselves as well as you. And usually the more extravagant (superficially attractive) their promises, the more risky they are likely to be! 'Cheer-leaders' abound in all of the 'Forums', and there is a predominant tendency for HYIPs (even honest ones!) to present themselves in ways which confuse and exaggerate the reality of the returns which they are offering under a thick layer of hype and questionable arithmetic! - It's a jungle out there!

This is not a very promising start - but luckily most of their offers are so obviously ridiculous that well over 95% of them can be rejected at first sight, and after applying stringent tests, the rest can be whittled down to a dozen or so 'good ones'. - This is more than enough for our purposes, and their quality is high! Here are some criteria to use: What is their 'Real Profitability'? - What is the Source of their Income? - Do they specify a Limited Lifetime? - Do they specify a Limited Total Pay-Out Amount? - Is their promised rate of return 'Realistic' or in 'Dream-land'? - Is 'Principal' included/excluded in the periodical 'Returns'? - Are there other conditions relating to 'Return of Principal'. - Are there any 'Fees and/or Charges'? - Are promised Pay-outs 'Fixed' or 'Variable' amounts? - What are their Payout Methods & Timing conventions? - What has been their responsiveness to 'withdrawal requests'? - What 'Minimum Investment' is required? - What has been their past 'Earnings History', in terms of both amounts and regularity? - Are their Marketing Methods free of scam and 'Ponzi Characteristics'? Now, if you are going to invest in HYIPs these are all questions which you really need to ask (and have answered!) before you invest!

It is important to note in passing that as you explore HYIPland you are bound to come across dozens of HYIPs which appear to offer 5%, 10%, 25%, even up to 150% per day in interest! - DON'T BELIEVE THEM! EVER!! - They may be very seductively presented, and their websites may have a wonderfully professional feel, so you may easily be tempted, but returns at this level are unsustainable! - Period!! - And you will regularly lose your money! - In reality, anything much above about 1% per day is highly suspect, and should be treated with great caution - In fact, from experience, we favor HYIPs which average about 0.4% per day for sustainable performance! You will find that there is no shortage of people in HYIPland who will claim infallible inside knowledge in making their 'chipped in stone' pronouncements (and taking your money!) - They are attempting to con you, and you should never believe them.

Program Diversification

There is a lot of confusion about the subject of 'diversification'! The popular notion is that by simply investing in multiple HYIPs, and thereby 'not having all your eggs in one basket' you will automatically (magically!) protect yourself from the consequences of failure. This is partly true, but it is a fairly shallow perception, and often only serves to spread problems out over a longer period of time, especially if all your 'baskets' are pretty much the same (a lot of little bad baskets don't make a good big one!). And another trap is that if some of your HYIPs are 'piggy-backing' their own investments on other HYIPs which have also been included in your portfolio, it can give rise to a 'domino effect' if one of them falls over - with the inevitable effect of your money being lost!

The real point of 'diversification' should be to introduce 'variety' into the mix! - Then if, say, something goes wrong under one foreign exchange traders particular investment technique, the other parts of your portfolio, like other traders, and the real estate, or stocks and shares, or IPO's, or arbitrage trading, etc. may not be impacted (they're even improved sometimes!) - and it is possible to take this 'variety' and use 'apportionment' to design a strong, solid backbone into the system, with numerous 'arms and legs' out there providing the dynamics for the well-being of the whole 'body'.

Apportionment of your Invested Funds

Clearly, each HYIP in your listing will have its own unique risk/benefit characteristic. They will all be different, so it would just be foolish to invest the same amount of money into each of them! This is usually totally overlooked by most HYIP investors, incidentally! The general procedure is that you decide where best to place your Funds - and at the same time, enable you to maintain the overall 'Target Profit'. The foregoing will produce your PLAN

Performance Tracking & Management

Management' of any activity is all to do with dealing with 'change'! - And there are always two kinds of 'change' needing to be dealt with - spontaneous, and induced. - With HYIPs the 'spontaneous' changes go on continuously out there in HYIPland, whether we like it or not, and if progress is to be made there needs also to be deliberate effort directed towards 'inducing' the other kind of changes to optimize performance. The key to organizing the proper level of attention to the management process is frequent, regular, scheduled reviews, coupled with an orderly management regime. We suggest a detailed management review of your portfolio on at least a monthly cycle, with weekly or even daily attention to some elements in between, if necessary.

As to the scope and methodology for each review? - That will vary according to individual concepts and tastes, but should be constructed along lines which answer these questions:
-What was the portfolio status at the completion of the last review?
-What changes (financial gains/losses & operational conditions) have occurred since that time?
-What 'withdrawals' (cash-outs) need to be made at this time?
-What 'contributions' (new money) are intended at this time?
-How much, and where, is the existing 'investment pool' of working funds distributed?
-Pursuant to the above, what is the new 'investment pool amount' available to start off the new 'cycle'?
-How should that 'pool' be distributed among the listed HYIPs?
-What money movements need to be organized, in to, out of, between, the listed HYIPs to conform to the new 'apportionment' plan?
-Make the changes

Summary & Conclusion

In this article we have depicted participation in High Yield Investments on the Internet as a balancing act between significant levels of risk, on the one hand, and unusually high levels of potential profitability, on the other. We have advocated careful consideration as to whether or not an individual should decide to participate, and presented information and methodologies whereby balanced performance outcomes may be optimized - in our opinion - with final decisions on all of the details being left in the hands of the individual participants.