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The Rahman and Young Investment Plans.
In our recent “First Thoughts” article about the Rahman and Young investment program, we summarized the company’s investment plans in the following way and also set the stage for the work we would have to do when analyzing the plans — which is what we’ll get to shortly.
Rahman and Young offer five different investment plans. As your investment amount increases, so too do the interest earnings that you receive. However, at first glance, it looks like only the lowest interest plan has a minimum investment level that will be affordable by all online HYIP investors. With a minimum investment of $2,500, even the second investment plan in the group will be out of reach for most investors. There is an even greater problem with the minimum investment for the remaining three investment plans.
The investment plans only pay interest on “trading days.” This pretty much means the normal five-day work week. However, apparently there are a number of banking holidays in the UK when interest also will not be paid. To keep things simple, we will not try to factor that into the equation. All of the five investment plans run for 80 working days. This is probably getting close to four months. So, these would probably be considered to be long-term investment plans by HYIP standards.
The daily interest that you receive depends on the plan that you choose and can vary from 1.9% all the way up to 2.5%. However, please remember our earlier statement that probably only the first investment plan paying 1.9% will be used by most investors. The interest is “gross” interest meaning that it includes your investment.
We will get into the details of how these investment plans work when we review the program a day or two from now. This review will be a little more complicated than usual because the program is based on business days rather than calendar days. Please stand by.
The website presentation of the five investment plans is very complete. In fact, more information is given than is really necessary. Following is a summary of the essential data for each of the plans:
Malmo
1.9%/business day
$20 – $2,499
Gothenburg
2.0%/business day
$2,500 – $9,999
Oslo
2.2%/business day
$10,000 – $19,999
Copenhagen
2.3%/business day
$20,000 – $39,999
Stockholm Review2.5%/business day
$40,000 – $80,000
Analysis of the Rahman and Young Investment Plans.
Now that we have all the information in front of us, we can get to work…
Usually HYIPs pay interest on calendar days. Rahman and Young pays it on business days — which, of course, is much more logical as that’s when an investment company earns its own revenue. However, we would like to be able to compare ALL types of investment plans on a common basis. We have found that the best way to do this is to determine the average daily net interest (DNI) that a plan pays over the course of its life time. DNI is based on calendar days. So, the first thing we have to do is to convert the Rahman and Young investment plans to calendar days.
There are roughly 22 business days per 30 calendar day month. The Rahman and Young investment plans are all 80 business days long. So, making the conversion, we find that the plans are roughly around 109 calendar days (80 x 1.36) long. As we indicated in our “First Thoughts” article, this is getting close to four months long. We used the conversion factor of 1.36 or 30/22 when converting from business days to calendar days. We’re not going to worry about the fact that once in a while there is a bank holiday or that there are a number of months that are 31 days long (and only one that is 28 or 29 days long). That’s the “small stuff.” We’re interested in the big picture.
OK, back to DNI. Thinking about the Malmo investment plan that pays 1.9% gross interest per business day, the total gross interest that you would earn for 80 business days would be 152% (1.9 x 80). Since this includes your investment, you have to subtract 100% to get your total net interest which will be 52%. Finally, dividing this by the 109 CALENDAR DAYS in the plan, we get a DNI of 0.48%. If you do the same calculation for the remaining four plans, you will get the following results:
Malmo. DNI = 0.48%
Gothenburg. DNI = 0.55%
Oslo. DNI = 0.70%
Copenhagen. DNI = 0.77%
Stockholm. DNI = 0.92%
There is another important piece of information we should find out about each of the investment plans. This is how many days it will take the plan to break even. Again, let’s start with the Malmo plan that pays a gross return of 1.9% per business day. It’s simple to determine when an investment plan breaks even. You just divide 100% by the gross daily interest. For our Malmo plan this gives us 52.6 business days (100/1.9). Multiplying this by our 1.36 conversion factor, we find that this is equivalent to around 72 calendar days — somewhat over two months. We can do the same arithmetic to determine how long it will take the other four plans to break even. Here’s the result:
Malmo. Break even = 72 calendar days
Gothenburg. Break even = 68 calendar days
Oslo. Break even = 62 calendar days
Copenhagen. Break even = 59 calendar days
Stockholm. Break even = 55 calendar days
OK, now that we’ve removed the “camouflage” from the essential features of these investment plans, it will be simple to discuss their profitability as well as the probable risk involved in investing with them. There are other factors that make an investment plan attractive or unattractive and we’ll try to discuss all of them in Part 2 of this Review which will follow in the next day or two.
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