High Interest Programs.

I’ve received some feedback from Emily News readers on Part 2 of this article (that you can read here) concerning my definitions of short, medium, and long term investment plans.  They correctly point out that the term of an investment plan is set by the HYIP and really has nothing to do with interest rate.  For example, they say, you can have a short term plan of only a week’s duration that pays a low interest rate (rather than the high interest rates I associated with short term plans).  On the other hand there are long term plans that pay high interest rates.  So, it is incorrect to say that all high interest plans are short term and all low interest plans are long term.  On that basis, let’s continue.  Instead of dividing our discussion up on the basis of term length, we will divide it up on the basis of daily net interest rate (DNI).

So, rather than classify investment programs as short, medium, and long term, we will classify them as high, medium, and low interest programs.  In Part 2 of this article, we suggested the following divisions for DNI:

High — over 3%
Medium — between 1% and 3%
Low — less than 1%

It’s been over a week since I wrote Parts 1 and 2 of this article, and now I’m inclined to move the starting point of high interest programs LOWER — down to around 2% (this is still over 10% per week!).  Sorry for these changes!  So, the revised breakdown of interest rates would be:

High — over 2%
Medium — between 1 and 2%
Low — less than 1%

This is a much safer way to think because you will treat a high interest program much more cautiously than you would treat a medium interest program.  I think that, when you look at HYIPs that are survivors, they will almost all offer interest rates that are 2% or lower.

OK, let’s get back on track and see if we can tie any of this together.  In HYIP Insights #8 (that you can read here), we talked about what we felt were the characteristics of a Wise HYIP Investor.   Then, in Parts 1 and 2 of this article, we provided a detailed discussion of interest rates.  And, all of this is hopefully going to enable us to come up with an Investment Formula.  So, finally, let’s see what we can come up with in the way of a “Formula.”  We’ll look at high interest programs first.  Remember that by high interest we’ll be referring to those investment plans with DNI rates of around 2% or higher.

Let’s discuss a few examples.  In the list of investment plans that I analyzed in Part 2, only the AltCoiner (reviewed here) plan had a DNI that was greater than 2% (actually, it was greater than 3%).  Also, it’s among a number of plans that have closed their doors since Part 2 was written.  Probably a few people that signed up when AltCoiner first went online made a profit.  Most lost money.  The point is, for high interest investment plans, the formula is to get in and get out ASAP.  This also implies that you should invest in high interest programs soon after they go online.  The idea is to try to make a few bucks on the program before it closes.  I should put this into perspective by noting that I LOVED the way AltCoiner set up their investment plans.  I think I expressed this opinion in my review of the program.  I believe that the company simply got carried away with the interest rates it offered.

What about very high interest (say, 5% to 10%) investment plans with a very short term (a week or so)?  These would probably be DNI since your principal most likely would be returned.  Well, first of all, we KNOW that it is impossible for a program with such interest rates to last.  It has to be a Ponzi that will survive on the deposits of new investors — for a while.  Perhaps the first few investors will get their principals back and make a profit — and the Admin will be able to brag about how successful his program is.  And, then it will quickly crash, as it has to because such programs simply are not sustainable.  If you are one of the lucky ones that are winners in such a program, I do NOT recommend that you reinvest in the program for another short cycle.   Again, the formula is to get in and get out ASAP.

I will also note that, for these high interest programs, since we acknowledge that they are going to close soon, there is no sense in even bothering to check out the “Legend” (see article about HYIP Legends here) that the company tells about itself as you already know that this type of program is run by someone from his living room sofa.  Investing in such a program is truly a gamble that you will be able to get through one investment cycle before the program closes.  If you are successful in doing this, be happy with the profit you have made and realize that, if you do decide to invest for a second cycle, your chances of losing everything are extremely high.

If you look through the HYIPs that are listed in the Emily News monitor, there is only one that offers investment plans having very high interest rates.  This is AurumBank (reviewed here).  For example, look at its Prestige Plan #1 that pays 6,500% (that is NOT a typographical error!) after 154 calendar days.  This calculates out to a DNI of around 42%!  So, if I invest $1,000 in this plan, I will receive $65,000 around five months later!  Can this be true?  Also, take a look at the AurumBank Premium Plan #1 that pays 7% interest per working day for 110 working days (or 154 calendar days) PLUS returns your principal at the end of the investment term.  Since your principal is returned, this is a DNI which is way higher than our 2% guideline.  To make this even more extreme, it is possible to compound your interest earnings with this plan and “plowback” (the term AurumBank uses) all your earnings into your principal.  If you do this for an investment of $1,000, after 154 days your principal will have grown to an astounding $1,706,929!  These are figures taken directly from the online AurumBank calculator.  Is this possible?  I don’t see how this program can possibly survive while offering such astounding returns.

Well, that’s enough for high interest programs.  Some folks love them — the real gamblers!  You can probably tell that I’m a bit afraid of them…

Low Interest Programs.

The other extreme are low interest programs.  These are the ones that have the most likely chance of being long term survivors.  If they have a DNI of less than 1%, it will take them at least three months to break even.  With this in mind, these are the programs that you should carefully review, taking into account ALL the factors that were discussed in the Wise HYIP Investor article that I referred to previously.  You want to be as sure as you can that they will be survivors.  Specifically, these are the types of programs for which you will most likely hold onto the hope that the Legends that they paint about the line of work that the companies are involved with are, indeed, true.

Emily News has a number of programs listed in its monitor that offer low interest investment plans.  Ace of Taste (reviewed here) has an investment plan that has a daily net interest rate of 0.75% per day.  This is actually a low interest SHORT term program.  As we discussed, generally, short term plans have high interest rates.  Specifically, this plan only yields 3.75 % net profit at the end of its five day term.     However, Ace of taste also has investment plans that have DNI rates of 1.2%, 1.5%, and 2.62%.  So, it’s tricky to label the overall program since it has investment plans with interest rates that we classify as low, medium, and high.  If the program fails because it doesn’t have the funds to pay investors in the HIGH interest plan, the entire program will fail and that means ALL the investment plans will die too — including the low interest plan.  So, this plan should probably be evaluated in the same way that you would evaluate any high interest plan.  This implies a great deal of caution such as we discussed in the previous discussion of high interest plans.  The point is that, when evaluating a program containing a low interest investment plan, you should look at the interest rates for ALL the plans the program offers when making your decision.

A program listed in the Emily News that ONLY has low interest investment plans is Bandeira Corp (reviewed here).  In Part 2 of this article, we discovered that the DNIs of what are probably the two most popular investment plans of Bandeira Corps are 0.47% and 0.58%.  So, these are definitely low interest investment plans.  And, Bandeira Corps is apparently doing a good job at managing them as the program has been around for well over a year.

How does Bandeira Corps fare with respect to other factors in the Wise HYIP Investor article?  One of our recommendations for longevity is that a program have an interest rate that is flexible and that is in tune with revenues generated by the company.  Bandeira Corps uses such a procedure which is a plus for them.

In the Wise HYIP Investor article, we also recommended sticking with programs where the Legend provided as to how the company generates its revenues is plausible and to avoid programs where there are overt lies and misrepresentations.  Unfortunately, Bandeira Corps falls into the category of a company that is telling nonsense stories about the way they do business (Please see our review of Bandiera Corps for more information on that).

So, here we have a program that is wonderful in some areas and that fails miserably in another.  How do you handle it?  I’m afraid there is no answer.  Logically, you should steer clear.  However, the Bandeira Corps might be the longest-lived HYIP around right now.  Our recommendation — our formula — for handling low interest programs would be to stick with the recommendations in the Wise HYIP Investor article.  In a crazy situation like Bandeira Corp, where the program has proved itself to be a winner, you might want to GAMBLE that the program will survive for another year and that you can make some money from it.  However, this is strictly gambling as you already know that the program is make-believe.

In Part 4 of this article, we’ll take a quick look at medium interest programs and then try to tie the entire article together.  Please stand by.

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