This is What a HYIP is...and isn't

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by BusinessJudge

High Yield Investment Plans occupy a section of the financial markets that reside in a murky, shadowy corner. Not many people know what they are, and those that have heard of them are probably convinced that they're dishonest (they may be right). Let's see if I can clarify some of the mystery surrounding HYIP's

HYIP is an acronym that covers a lot of financial territory. It has, in the past, conveyed the idea of an investment vehicle offering a high rate of return along with increased volatility and risk.

Some investigators believe that the majority of HYIPs are Ponzi schemes, in which new participants provide the cash to pay a profit into existing investors' accounts.

The problem now is that HYIP's have evolved into "business opportunities" of dubious quality and honesty. Generally now a HYIP is run offshore from the U.S. and therefore not legally bound by U.S. financial laws and regulations. In fact, they are nothing more than a web page with an email address. The web site will show some successful looking men and women involved with the world of high finance along with some articulate words about how you too can participate. Some HYIP's suggest incredible returns on your money; even promising a "guaranteed" return of 1% - 2% a day or even up to 300% - 400% a month.

They'll make vague references to some esoteric investment opportunities they've uncovered, or perhaps a black box financial analytical tool that they have worked out that will subsequently delivers incredible returns on your investment.

You want to know what does seem to happen frequently? A HYIP will take in investment money, generate some earnings and actually pay out wonderful returns to a few investors. Word spreads in the community and at this point they appear to have achieved a level of authenticity and reliability. However, suddenly and without warning their web site goes off line and all remaining investors are left wondering, "Gee, what happened?"

Here's what happened. They opened their doors...money came in and they paid some of that same money to establish credibility. Then more money came in which they kept. Suddenly their doors are shut, their web site is no longer available and you can't get a hold of them.

As you will find if you monitor various HYIP monitor forums, a large number of HYIP participants will continue to participate in new schemes even after they have lost money in previous ones. This suggests that many of the participants are aware of the risk, and know that most HYIP's are fraudulent, but choose to put money in the programs anyway. This kind of irrational risk-taking behavior is typical of gambling addicts.

Don't be fooled by promises of huge returns, they're not really possible. Use some common sense refrain from being greedy and you'll hang on to your money longer.

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