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What is a HYIP?

There are tons of misleading information available on the web concerning HYIPs, and many misconceptions about what a HYIP is. In this short article an attempt is made to paint an honest picture of what the HYIP is and what it could be.

First of all here is the definition of HYIP, which anyone will see by typing this word into any search engine and where top result will come from Wikipedia.org:

A high-yield investment program (HYIP) is a type of Ponzi scheme, which is an investment scam that promises unsustainable high return on investment by paying previous investors with the money invested by new investors.

This definition is simply based on the majority of known cases and it is therefore correct to a great degree, but in reality this area is evolving and it is quite possible that sooner or later we will see higher fraction of these investment programs to be not completely fraudulent. HYIPs offer extremely high returns at extremely high risk. To help explain the risk I’ve made the below diagram:

This is my interpretation of the HYIP industry. As you can see, it’s my estimation that 99% of the programs in the HYIP industry are either Scams or Ponzi schemes.

A Ponzi scheme is a program that pays returns to investors with their own money or with money paid by subsequent investors, instead of paying returns with actual profit earned. A Ponzi scheme is not sustainable as eventually the amount of money promised in returns will exceed the amount of money invested and there will be no way to pay investors. Many Ponzi schemes never make it to the point where the program is unsustainable, instead turning into a scam while the program is still profitable.

A scam, on the other hand, is blatant fraud, or intentional deception made for personal gain. These are programs created with no intention to pay the investor and are created with the sole intention to steal investors’ money. Scam programs are nearly impossible to identify from other programs and usually can be classified as one of three different types of scams:

1. Quick Scam – The program closes before any payments are made.
2. Timed Scam – The program closes at some predetermined time set by the admin. Most programs are timed runs that run for a certain number of cycles or until a certain amount of money is deposited by investors.
3. Ponzi Scam – The program was set-up as a Ponzi scheme, unfortunately the program is no longer making money and is paying out more than it is making. The admin, with the program failing takes what money is left and runs.

Legitimate programs are what we’re all looking to invest money into. They are the small percentage of programs in our industry where a large amount of money can be made. It is also possible to make money as an investor in a Ponzi scheme. If you are among the earlier investors, there is an increased chance that you will receive payment for your investment before the scheme ends.

Unfortunately, it is impossible to know which investment programs are Ponzi schemes, which are scams, and which are legitimate programs.

Final Thoughts

Remember that there is no safe investment that will provide you with high returns over a short period of time. The higher the risk of loss, the higher the return potential. The truth about High Yield Investment Programs is extremely high rewards are available at equally high risk. If you are the type of investor that is willing to take high risk for high potential reward, you are in the correct place. We research programs before investment, and invest in programs we feel have the lowest risk.

Unfortunately, despite our preparation losses do happen. Please do not invest more than you can afford to lose.

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