The BitBoots Investment Plans.

Our “First Thoughts” article provided a pretty good summary of the BitBoots investment plans.  Here’s what we said about the plans in that article.

BitBoots offers five investment plans.  All of them are what we refer to as “perpetual” plans.  This means that, after you make an investment, you will receive earnings from it forever.  This is like a normal bank account but, of course, the interest that you receive is much much higher.  Here’s what the five investment plans look like:

Level 1
1.1% daily
$50-$1200

Level 2
1.3% daily
$1200-$2500

Level 3
1.6% daily
$2500-$7500

Level 4
1.9% daily
$7500-$15k

Level 5
2.2% daily
$15k-$250k

The BitBoots investment plans are very easy to understand.  Unlike many other HYIPs, there is no struggling to figure out how they work.  Since they are perpetual, they are certainly long-term plans.  Taking a quick look at the investment limits, it appears that only the Level 1 and Level 2 plans might be affordable by the typical online investor, although a few adventuresome folks might opt for the Level 3 program.  It also looks like the plans will provide a satisfactory return that is not so high that the overall program will be at risk of closing prematurely.

Analysis of the BitBoots Investment Plans.

First, let’s take a look at how long it takes each of the BitBoots investment plans to break even.  You do this by dividing 100% by the daily percent return from the plan.  For example, in the Level 1 plan, you divide 100% by 1.1% to get that the plan breaks even in approximately 91 days.  Doing the same arithmetic for the other four plans, you get:

Level 1     91 days
Level 2     77 days
Level 3     63 days
Level 4     53 days
Level 5     46 days

Next, let’s take a look at how profitable the BitBoots investment plans are.  Well, this is tricky with “perpetual” investment plans like these.  In a typical investment plan with a finite term, after you break even all of your earnings are profit until the end of the term.  In a perpetual plan, there is no end and so, at least theoretically, you would continue to receive profits forever — a lifetime income.  Alas, all things DO come to an end and sooner or later the program will close its doors and the investment plan will end.  The trick is to determine when.

From experience we know that it is rare for an HYIP to survive for a full year.  Even a half year would be considered to be a long-lived program in HYIP world.  So, the best that we can do to determine profitability is to ASSUME a lifetime for the BitBoots program.  To be fair, we’ll assume a number of different lifetimes and see how profitable the plans are for each of them.  The Level 1 plan takes the longest to break even — around three months.  So, let’s work things out for three different lifetimes for each of the plans — four months, eight months, and 12 months.  And, to simplify matters, we will only do this for the Levels 1, 2, and 3 plans because the minimum investment requirements for the Levels 4 and 5 plans are probably beyond the reach of online investors.  In fact, we always discourage investors NOT to put large amounts of money into ANY online investment program unless it can provide verifiable proof of its existence and the success of its investment plans.

Now that we’ve established our ground rules, how are we going to determine profitability?  Here at Emily News, we have found that the best way to do this is to calculate the AVERAGE daily net interest (DNI) that an investment plan pays over its lifetime.  This is simply the total net interest — profit — paid by a plan divided by the number of days in the plan.

OK, it’s time to do some arithmetic.  Assuming that the Level 1 plan survives for four months (120 days), the total gross interest that you will receive will be 120 times the daily interest of 1.1% or 132%.  Subtracting 100% from this because it includes your investment, you get a total net interest of 32%.  Finally, dividing this by the 120-day assumed length of the investment plan, you get a DNI of 0.27% — not very much.  If you repeat this same arithmetic for assumed lengths of the plan for 8 and 12 months (240 and 360 days), you would get the following results:

Level 1
4 months     DNI = 0.27%
8 months     DNI = 0.68%
12 months     DNI = 0.82%

If you do the same arithmetic for the Level 2 and 3 plans, here’s what you would get:

Level 2
4 months     DNI = 0.47%
8 months     DNI = 0.88%
12 months     DNI = 1.02%

Level 3
4 months     DNI = 0.77%
8 months     DNI = 1.18%
12 months     DNI = 1.32%

In Part 2 of this review we will discuss the information we have come up with here and will try to draw some conclusions about the overall program — pro and/or con.  Please stand by…

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