In this part of the article, I’d like to compare the daily net interest rates for a few programs that are running right now. We will find that there is wide variation in them. Although interest rate is a very important factor to know in order to decide whether or not to invest with a program, it is not the only factor. In Part 3 of this particle, we will discuss these other factors and, ultimately, try to come up with our own “investment formula.” But, for now, let’s continue our investigation of interest rates by looking at those offered by some real live programs. All of the programs are listed in the Emily News Monitor and you may want to refer to our review of each of them. The information in the reviews will help you to get a more complete understanding of what we do here.
Example 1. FexFund (reviewed here, interview with the Admin here) Starter Plan. 109% after 7 days. This is an easy one. Your principal of 100% plus 9% total net interest are both given to you at the end of the nine day investment term. To get the net daily interest earned, you divide the total of 9% by the number of days in the term, seven, to get 1.29%.
Example 2. FexFund Medium Plan. 6% daily for 20 days, principal included with daily returns. The total gross interest will be 120% (6 x 20). Subtracting 100%, you get the total net interest of 20%. Dividing this by the length of the investment term, you get the net daily interest of 1% (20/20). So, it looks like the FexFund Starter plan is more profitable than the Medium plan.
Example 3. FexFund Investor Plan. 5% daily for 30 days, principal included with daily returns. Similar to Example 2, the total gross interest would be 150% and the total net interest would be 50%. Dividing this by the investment term of 30 days, you get a net daily interest of 1.67%. So, from the point of view of interest, the FexFund Investor plan is the best. Again, there are other factors to be considered, the most obvious being the length of the investment term and the risk involved in tying up your money for longer terms to take advantage of higher interest. This is a common choice to be made in the HYIP business.
Example 4. AxisCrude (reviewed here) Plan A. 3% daily for 50 days, principal included with daily returns. This AxisCrude plan is very similar to the last two FexFund plans that we just looked at. However, let’s see how the net daily interests compare. For this plan, the total gross interest would be 150% (50 x 3) and the total net interest would be 50%. Since, the program runs for 50 days, the net daily interest will be 1% (50/50) which is the sdaily interestsdaily interestsame as the FexFund Medium plan. So, a factor other than interest must come into play if you are deciding between these two plans.
Example 5. AxisCrude Plan B. 4% daily for 45 days, principal included with daily returns. The calculation is just the same as the previous three plans. Here are the results: total gross interest = 180%. Total net interest = 80%. Net daily interest = 1.78%. This is pretty close to the FexFund Investor plan. In my mind, the FexFund and AxisCrude investment plans are competitive.
Exampe 6. BetCruisez (reviewed here) investment plan. 106% per week. This is very similar to Example 1. In this case you are given your principal plus another 6% back after seven days. So, the 6% is your total net interest. Your net daily interest would be 0.86% (6/7), the lowest we have calculated so far.
Example 7. Carbon7 (reviewed here) Weekly Plan. 110% per week. This is the same as Example 1 and Example 6 but with a slightly higher interest rate. You can do the calculations to verify that the net daily interest would be 1.43%. So, already, we have three different weekly programs that pay slightly different net daily interest rates. Should you put all your money in the one with the highest rate? What about diversification? We still have other things to consider before coming up with a formula. This is getting interesting.
Example 8. Carbon7 CR7 Plan. I’m going to copy some of the following from our review of this plan. This is a daily plan that runs for 30 calendar days BUT you are only paid interest earnings on business days. For the typical 30 day month, there are 22 business days. So, with the daily interest rate of 7%, the total gross interest paid by this plan is 154% (22 x 7). Since your principal is returned to you with your earnings, your total net interest is 54%. In calculating a net daily interest rate, you have to decide if you are going to use calendar days or business days. I will opt for calendar days because, even though you only earn interest on business days, your funds are tied up for the full 30 calendar days. So, this is how long you will have to wait for the investment plan to end; the number of days you are actually earning interest doesn’t matter. So, dividing the total net interest of 54% by the investment term of 30 days, you get a net daily interest rate of 1.80%. I note that, even though we used the longer term of 30 days rater than 22 days, we still come out with the highest net daily interest rate so far.
Example 9. AltCoiner (reviewed here) XMR Plan. 3.36% daily forever. This is an example of a perpetual plan. However, AltCoiner allows the investor to withdraw his principal at anytime. Therefore, it really functions like a “principal back” plan. But, you decide the length of the plan! So, it is difficult to decide how to calculate a daily interest rate. If, indeed, you limit your term of investment and opt to withdraw your principal, then your net daily interest rate will be the 3.36% which is very high — at least compared to programs we’ve analyzed so far. On the other hand, if you decide to stick with AltCoiner until it finally closes its doors, we ought to assume a lifetime for the program and calculate the daily net interest rate in that manner. Let’s do that assuming a lifetime for the program of 180 days (around a half year). In that case, the total gross interest would be 605% (3.36 x 180). Subtracting 100%, the total net interest would be 505%. Dividing this by the 180 days, we get the net daily interest rate for our assumed scenario — 2.81%. This is still very high compared to programs so far. If AltCoiner survives longer that this, the effective rate would be higher; it is doesn’t survive this long, it would be lower. ALTCOINER IS NOW CLOSED! DO NOT INVEST THERE! HOWEVER, I AM LEAVING THIS ANALYSIS HERE AS THIS IS STILL A GOOD EXAMPLE OF A PERPETUAL PLAN. PERHAPS THE HIGH INTEREST THAT ALTCOINER OFFERED WAS A FACTOR THAT LED TO ITS PREMATURE CLOSING.
Example 10. Bandeira (reviewed here) Rent Plan #1. Variable interest rate from 1% to 1.8%, term ending when your gross earnings reach 150%, and principal included in your earnings. This plan is somewhat complicated as both the daily interest rate and the length of the term can vary. You might want to take a look at the review for this program for more details as to how the investment plan works. But, to show how you might handle this type of situation when determining a net daily interest rate, let’s assume that we are working with the mean interest rate of 1.4%. So, the first thing we need to do is to determine how long it will take for us to reach the target of 150% total gross interest. That’s easy. Just divide the 150 by the assumed daily interest rate to get around 107 days. Since your principal is included in this, your total net interest will be 50% (the same for all Bandeira plans). Dividing 50% by the estimated number of days in the plan, you come up with a net daily interest rate of 0.47%. This is quite low and might be one of the reasons why the Bandeira program has survived for so long.
Example 11. Bandeira Rent Plan #2. This is the same as Plan #1 except that the interest rate varies from 1% to 2.5%. In this case the mean interest rate if 1.75% and we will use that for our calculation of net daily interest rate. Proceeding in just the same way as we did in Example 10, the length of the investment term will be around 86 days (150/1.75). The total gross interest that would be earned in this period would be 150%. Subtracting 100%, the total net interest would again be 50%. Finally, dividing this by the number of days in the program, you get a net daily interest rate of 0.58% (50/86). Again, this is quite low.
OK, this is more than enough in the way of examples. I hope it clarifies how you would handle determination of net daily interest rate for a number of different program types.
Very often a reviewer will state that an investment plan is long term, medium term, or short term. This refers to how long it takes the plan to break even. A plan with a high interest rate will break even quickly. On the other hand, a plan with a low interest rate will take a long time to break even. Going along with this is always the thought that plans offering high interest rates are less likely to survive, whereas the ones with low interest rates are more likely to survive. You might say that these characteristics balance each other out because, for example, with a more risky high interest rate investment plan, although it would be nice, you are less concerned about program survivability than you would be for a low interest program where it might be necessary for the program to survive for three or more months for you to break even and, perhaps for a year or more for you to earn some serious money with it.
As an aside, I didn’t specifically state it, but I hope you are thinking of net daily interest rate as we proceed here.
Well, let’s but some numbers on this. Let’s decide on some specific ranges of interest rates that we might classify as short, medium, or long term. There will be some opinion here and you might disagree with what I come up with. However, if you do, I suggest that you come up with an alternate classification of your own that you can use in your investment decision making.
A program that will break even in one month (30 days) will have an interest rate of 3.33% (100/30). A program that will break even in two months will have an interest rate of 1.67% (100/60). And, finally, a program that will break even in three months will have an interest rate of 1.11%. My opinion is that a program that will break even in less than one month is short term and one that will break even in more than three months is long term. Rounding the percents off, here is a possible guide for you:
Less than 1% — long term
Between 1% and 3% — medium term
More than 3% — short term
You might rightfully say that the range of interest rates for medium term programs is very large. I agree. However, this is the large gray area in the HYIP investment world where the unexpected is most likely to happen. The closer an investment gets to 1%, the more likely it will be a long term survivor. Interest rates in the neighborhood of 3% or more are inherently risky. But, these plans mature quickly and the wise investor might want to think very carefully about committing funds to them for the long term. When you get into the neighborhood of 2% net daily interest, you are on uncertain ground — not that anything in the HYIP world is for sure.
And, this is what we will get into in the third and final part of this article series. So far, we have nailed down some terminology and looked at interest rates offered by a number of current programs. Well, there are a lot of factors beside interest rate that should be considered when developing an “Investment Formula.” This is what we will deal with in Part 3 of this article. And, this is where I will refer a lot to the article in HYIP Insights #8 entitled “The Wise HYIP Investor” that you can read here. Please stand by…
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