The most important truth behind HYIP is that they are not actually investments. They are more like referral structures that work as long as there are people ready to put their money in them. There are a lot of other drawbacks of the HYIPs as well.
Basic Truth Behind HYIP
One of the most basic truths behind HYIP is that the High-Yield Investment Programs are not investment programs as such.
The HYIPs is basically substitute terms for pyramid schemes and networking schemes that are provided on the world wide web.
Internet and HYIP
The HYIPs have increased in number after the advent of the Internet.
It has been observed that there are more companies that are offering HYIPs on the Internet as the world wide web makes it very easy to offer these services as well as avail them.
Rates of HYIPs
There are a lot of HYIPs that are offering really high rates of return. More often than not, these returns are the only reason as to why the investors are attracted to a particular High Yield Investment Program. It has been observed that even seasoned investors have been influenced by such offers.
Payment Truth Behind HYIP
The HYIPs follow a pyramidal or referral structure. This means that the entire process runs on references the more the merrier. In these circumstances the money of the new investors is used to make the payments of the investors who are supposed to get money.
Since the HYIPs are not businesses that are run for the purpose of creating funds it has been seen that their success and survival depends solely on the coming of new investors. This means that the new investors are always running the risks of losing out on profits as their funds are being used for the purpose of paying off their predecessors.
That implies that for them to get their money back and make profit they would have to wait till new investors come in. If the new investors do not come then their money is as good as wasted.
Truth Behind HYIP Monitors
For an investor to be assured of returns he has to verify with the HYIP monitors that shed some light on the status of the HYIPs. If the monitors show the particular site to be paying then that is good news for the investors who have or are eager to invest money in the particular HYIP.
However, there are inherent shortcomings in the functioning of these tools. First of all, these monitors can be manipulated financially. Since the investors and other users can post their personal views on these tools the HYIPs have frauds pose as investors and make comments that show these companies in a false positive light.
Last Updated on : 5th July 2013