Introduction.
Followers of EmilyNews are aware that when we review the investment plans offered by an HYIP, we frequently refer to their DNI. DNI, of course, refers to the “daily net interest” of an investment plan. To make sure that the meaning of the term is clear, it is the total net interest paid by an investment plan averaged out over the number of calendar days in the plan. In other words, it is the total net interest divided by the number of calendar days in the plan. Finally, to be absolutely clear, the word “net” means “profit.” On the other hand, the word “gross” refers to earnings that include your original deposit as part of them. So, to get net earnings from gross earnings, you have to subtract your deposit.
And, to review a little, just why is knowing the DNI of an investment program so important? The reason is because it is a means of expressing the profitability of all investment plans IN THE SAME WAY. When talking about how much money you are earning, if one person talks about dollars per hour and another talks about annual salary, it is hard to compare them. You have to compare apples to apples, not apples to oranges. DNI is the best measure of profitability that we have come up with so far. What can be clearer than knowing the amount of profit that an investment plan will pay you on a daily basis?
In this article I’m going to derive some simple formulas that you can use to obtain the DNI of an investment plan. You will be able to substitute a plan’s given information right into the formula and immediately get its DNI. You may remember that, in our reviews of an HYIP’s investment plans, it takes a small paragraph to obtain the DNI of each plan. So, we’re going to figure out some shortcuts that will give you the same result immediately. You might even want to write these formulas down on a piece of paper so that you will have them handy when you encounter an HYIP investment plan for which you would like to know the DNI.
In order to do all this, we will need some abbreviations. We already have one of them, DNI, which means daily net interest. Here are all of the abbreviations that we will use along with their meanings:
DNI = daily net interest (based on calendar days)
DNIB = daily net interest (based on business days)
TNI = total net interest
DGI = daily gross interest
TGI = total gross interest
CD = calendar days
BD = business days
In what follows, we’re going to talk about the two most common types of investment plans:
- Those that return your deposit at the end of the investment term and
- Those that return your deposit as part of your earnings.
And, for each of these types of investment plan, we’re going to talk about two variations:
- Those that pay interest on calendar days and
- Those that pay interest on business days.
Let’s begin…
Deposit Returned at End of the Investment Plan — Interest Paid on Calendar Days
Interest Paid Daily
Suppose that an investment plan pays you a certain daily interest and then returns your deposit to you at the end of the investment plan. Well, this is the simplest case of all. Since your deposit will be returned to you, and assuming that the plan survives till the end of its term (we’ll always make this assumption), your earnings are pure profit — your daily net interest or DNI. So, for this case, no calculation at all is required.
The given percent interest is the DNI of the investment plan. No formula is necessary in this case.
Interest Paid at End of the Plan
In this case, you are NOT paid interest on a daily basis. Rather, you are paid a certain amount of interest at the end of the investment plan at which time your deposit is also returned. This total return is what we refer to as your total GROSS interest or TGI. Numbers like 110% or 117% are common. We always want to aim at NET interest. So, to get total your net interest or TNI, you simply subtract 100% from the value of TGI to account for the fact that it includes your deposit.
TNI = TGI – 100
To get daily net interest or DNI, you simply divide this by the number of calendar days in the investment plan. The result is our first formula:
DNI = (TGI – 100)/CD. FORMULA #1
Example 1.
An investment plan pays you a 112% gross return after 9 calendar days. What is the DNI of the plan?
The values to be put into the formula are:
TGI = 112
CD = 9
This gives you:
DNI = (112 – 100)/9 = 1.33%
Deposit Returned at the End of the Investment Plan— Interest Paid on Business Days
Interest Paid Daily
When an investment plan only pays interest on business days, you have to remember that DNI is based on calendar days and that it might be necessary to convert business days to the equivalent number of calendar days. This is easy to do if you remember that there are roughly 22 business days in a 30 calendar-day month. So, we have the proportion:
30/22 = CD/BD.
In words, this says that: 30 is to 22 as the number of calendar days is to the number of business days. This is really a simple equation that you can rearrange to get:
CD = (30/22) BD
or,
CD = 1.36 BD
This is another important formula although it isn’t a formula for DNI.
OK, with this out of the way, let’s start off with the case where you receive interest on business days plus your deposit is returned to you after a certain number of business days. This is similar to the first case we discussed but now we are talking about business days instead of calendar days. Well, like this previous case, since your deposit is being returned, your interest earnings are again net profit. However, since you only receive interest on business days and DNI is based on calendar days, we have an inconsistency that we have to work out. First, let’s compute the total net interest that you are paid. In order to do this, we have to introduce one more term. Since the interest that you are receiving is a NET interest (your principal is being returned at the end of the plan) and it is daily but on BUSINESS rather than CALENDAR days, we call it DNIB (daily net interest business days). So, to get the total net interest paid, we multiply the DNIB by the number of business days in the program like this:
TNI = DNIB x BD
Finally, remembering that DNI is just the total net interest averaged out (divided by) over the number of CALENDAR days in the program, we have:
DNI = (DNIB x BD)/CD
And, also remembering that the number of calendar days equals 1.36 times the number of business days, we finally come up with:
DNI = (DNIB x BD)/1.36 BD
The clever mathematician will see that the term “BD” cancels out of this formula. So, all that you are left with is:
DNI = DNIB/1.36 FORMULA #2
This may have seemed complicated. Let’s use this formula to work an example — and we’ll see how easy it is to use it in practice.
Example 2.
Am investment plan pays you 1.6% interest on business days for 18 days and returns your deposit at the end of the plan. What is the DNI of the plan?
The only value to be put into the formula is:
DNIB = 1.6
This gives you:
DNI = 1.6/1.36 = 1.18%
Interest Paid at End of the Plan
This is similar to the case above where we were dealing with calendar days. In the case we are considering now, we can actually use Formula #1 which is:
DNI = (TGI – 100)/CD
However, now we are given the number of business days that the plan runs for rather than the number of calendar days. So, we simply substitute CD = 1.36 BD to get:
DNI = (TGI – 100)/1.36 BD. FORMULA #3
Example 3.
An investment plan pays you 132% interest after 19 business days. What is the DNI for the plan?
We use the following information:
TGI = 132
BD = 19
Substituting into Formula #4 gives you:
DNI = (132 -100)/(1.36 x 19) = 1.24%
Well, I hope this information is helpful rather than confusing! In writing future reviews, I will continue to work out DNIs as I have in the past. But, I will also show how you could use these formulas as shortcuts to get to the answer more quickly.
Summary of Formulas for DNI for Investment Plans that Return Your Deposit at the End of the Investment Term.
Interest Paid on Calendar Days
Interest Paid Daily
The given percent interest is the DNI of the investment plan. No Formula is necessary in this case.
Interest Paid at the End of the Plan
DNI = (TGI – 100)/CD. FORMULA #1
Interest Paid on Business Days
Interest Paid Daily
DNI = DNIB/1.36 FORMULA #2
Interest Paid at the End of the Plan
DNI = (TGI – 100)/1.36 BD. FORMULA #3
In Part 2 of this article, I will talk about Formulas for DNI where your deposit is returned as part of your earnings. Please stand by…
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