Earn Extra From HYIP

How and when to invest. It is because, HYIP like other form of risk investments such as Forex, stocks and legal gambling also associated with extremely high risk. I have some rules posted on my other blog that explains trading on HYIP. But, what's HYIP anyway?

For a newbie on this word or world, HYIP stands for High Yield Investment Program that is offered on the internet through investment website.

The newer type of high yield investment program involves smaller amounts of money. Most of these programs claim to pay out 1-10% a day, or even up to 100% per month. Many of these programs are scams, but some may actually be legit.

The early Internet HYIP programs usually involved day trading on the stock market, on futures, or in foreign exchange. An investor could pay as little as $20 to the program, and would start earning a percent or two each working day. You could withdraw your gains at any time, though, by leaving the money in, compounding would cause your investment would grow, thus increasing your pay outs.

Experienced day traders can and do make anywhere from 1-20% each day -- normally averaging (after bad trades and losses) 2% each day. The money paid into a HYIP program would be pooled together, and invested by the day (or technical) trader. Using 50% margins, where the investment broker loans the trader an amount equal to the amount he's investing, the trader could pay out the 1% or so each day to the HYIP investors, and still make money for himself. According to some books on day trading, good traders are right 80% of the time, and should never lose more than 3% of their investment on the bad (or wrong) trades. This type of HYIP is sustainable and not a scam. However, as a potential HYIP investor, you have no way of knowing if the program you're interested in is legitimate, or is a take the money and run type of scam.

Soon, other types of HYIPs appeared. Some were based on the selling of ebooks and software. Once again, money invested in the HYIP was pooled and spent on advertising for selling ebooks and other downloadable products. If a business knows that for every $100 it spends in advertising, it will earn $300 in revenue, then it can pay out 50% or so a month on the HYIP program, because it knows with a reasonable degree of certainty that it will get the original $100 back, plus make a pre-tax profit of $200. Such a business would want to maximize the amount of money available for advertising, in order to maximize the amount of profits it can earn each month. In essence, they have borrowed money from individual HYIP investors (at an exorbitant interest rate) to make large profits as quickly as possible. This scheme works, but there's an upper limit on how long it can be sustained, and how much money can be spent on advertising. Sooner or later, the market for the products is saturated, and the returns on the advertising will decline sharply. At that point in time, the business can no longer pay out the 50% per month as promised, and the HYIP would have to be shut down.

The Forex type of HYIP is similar to the day trading type. Instead of buying and selling shares on the stock market, the traders buy and sell currencies and currency futures. They claim to have systems that guarantee success, but I'm not convinced that such systems exist. The Forex HYIPs can (and do) offer higher rates of return because most Forex operations are margined up to 90% - not just 50%. That means a 1% gain on the trade is worth 10% of the initial investment. The returns are higher, but the risks, despite the claims, are higher too.

Other HYIPs are dubious, and should be regarded with suspicion. Some claim to be "gold games", whatever that means, while some are really nothing more than bets. One HYIP that I looked into promised 80% gains a day. It wasn't an investment program -- your $20 returned $36 IF the transaction number ended with either an even or an odd digit. On even numbered days, an even numbered transaction number would "earn" 80% of the "investment" plus the original sum. If the transaction number was odd on an even numbered day, then your "investment" went bust and you got nothing. Statistically, over a period of time, the "successful investments" (wins) and the "failed investments" (losses) would even out. Since the pay outs were only 80%, over the long term, the organizer of this scam was guaranteed to earn 20% of the money anyone foolish enough to participate would send him. This "program" is undoubted illegal. I'm not sure if it's still going on or not. If so, stay away.

If you are considering on making an investment in a HYIP be certain to do diligent research first. Any legitimate security that is sold to the public must be registered with the Security and Exchange Commission (SEC). If the HYIP you are considering is not registered, you should not invest. Other questions to ask yourself include, whether the claims to good to be true, and how the people running the program generate the high yield returns that you are being promised. You should be careful of the claims people make regarding some secret network or principle that allows them to make excessive returns. If the proponents of the HYIP cannot or will not explain how the returns are made then you may want to avoid investing in the program.

To summarize, any HYIP program that involves offshore banks or investment groups, secret rules, unusually high interest rates, tax shelters, etc., should be avoided at all costs. Don't get involved with them in any way. Online HYIPs MAY be legitimate, but probably aren't. Remember the two rules we talked about at the top of this page: If it sounds too good to be true, it probably is, and, Never invest more money than you can afford to lose. If you want to try an online HYIP, investigate first. Put the minimum amount in and see what happens over a period of 3-6 months. If the pay outs are consistent and on time, then maybe you have found a legitimate HYIP. Take the money and run scammers tend to close up shop within 6 months or so, when the money coming in tails off and the demands for late pay outs increase.

Good luck in your investing, and be very careful...invest only what you can afford to lose. And find out what is legit and what isn't before committing to any HYIP program.

Sources: mirroreyes and other HYIP sources