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The Archwood Timber Investment Plan.

In our “First Thoughts” article about Archwood Timber yesterday, we emphasized that an attractive feature of the program is its simplicity.  Here’s what we said about their investment plan:

The simplicity of the Archwood Timber program really becomes apparent when you look at its SINGLE investment plan.  That’s right; there is only one investment plan and you can invest in it for a minimum of $30.  The plan pays 10% interest for 13 days and your deposit is included in your interest returns.  This program will be simple to analyze and we will get to that in a day or two when we review the program.  Please stand by.

Analysis of the Archwood Timber Investment Plan.

Let’s take a look at the most important thing about the investment plan first — its profitability.  We use average DNI (Daily Net Interest) as a measure of this.  As the name implies, this is the average profit that an investment plan pays you on a daily basis.  We use the “average” profit — net interest — as there will be times during the course of an investment plan when you are not making any profit at all while at other times you will be making a very high profit.  So, the average daily profit that you earn over the entire length of a plan is the important thing.

For the Archwood Timber investment plan, you earn a daily gross interest of 10% for 13 days.  This comes to a total of 130% total gross interest.  Subtracting 100% from this because it includes your deposit, your total net interest is 30%.  Finally, dividing this by the 13-day length of the program, you get a daily net interest (DNI) of 2.31%.  Thinking in terms of profit per week, if you multiply this by 7 days per week, you see that your average net interest (profit) per week is around 16%.  This is a LOT.  The implication is that, if I invested $100 in the plan, I would earn around $16 profit per week.

Before discussing the investment plan in more depth, let’s quickly determine how long it will take the plan to break even.  That’s simple to do.  You just divide 100% by the daily gross return of 10% that you receive to find that you will break even in 10 days.  And, in one week’s time, you will recover 70% of your investment.

Discussion.

OK, we found out that, with a DNI of 2.31%, the investment plan is quite profitable.  But, is this interest too high for the company to sustain in the long term?  In HYIP Insights #12, we suggested that programs offering investment plans having DNIs higher that 2% might have a reduced chance for long term survival.  We emphasize that this is only our opinion, although it is based on observing how long many different HYIPs have survived in the past.  This DNI is not “insanely” high (which happens from time to time in the HYIP business).  However, it is high enough such that investors should treat the program cautiously.  Hopefully, awareness of this fact will also lead to wise and cautious business practices by the administrators of Archwood Timber.

I am always thinking about possible modifications to investment plans and one that quickly came to mind for this one was reducing the length of the plan to 12 days.  If you do the same arithmetic as we did for the present 13-day program, you come up with a DNI of 1.67% (further reducing the length of the program to only 11 days would give a DNI of 0.91%).  There is no rocket science involved here and I suspect that the folks at Archwood Timber thought long and hard about the length of the investment plan they would offer and whether or not they would be able to pay the level of profit (DNI) that each length of plan would require.  Let’s hope that they made a well-though-out decision that they can adhere to in the long term as well as when the program is young (and very profitable for them).

In HYIP Insights #21, we presented an article entitled “A Safe Investment Guide.”  In that article we tried to nail down some characteristics for an investment plan that might make it a worthwhile place for you to invest your hard-earned money.  Interestingly, Archwood Timber scores quite well as far as this guide is concerned.  For example, we recommended staying away from investment plans that take longer that a month to break even.  No problem with that as the Archwood Timber plan breaks even in only 10 days.  We also recommended that you should only invest in programs that return your investment on a daily basis.  Again, no problem.  We also recommended that a person only invest in NEW programs, those that have been in existence for less that a week.  This is a hard requirement to fill but, Archwood Timber is still within this time frame.  The only recommendation in the “Guide” that Archwood Timber does not fulfill is that the DNI be less than 2%.  We’ve probably discussed that enough already.

Conclusions.

Archwood Timber offers a single easy-to-understand investment plan that it is quite profitable.  This profitability also makes the plan somewhat risky.  However, the earnings that are promised are not “out of sight” and it IS possible that this program could be with us for a long time to come.  Archwood Timber will probably be very popular with the investor who is willing to take a risk, but who is also wise enough to stay away from the many programs that offer impossible returns.

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