This program moved to CLOSED! Do not invest there!

The Forest4 Investment Plans.

In our “First Thoughts” article about Forest4, we provided a fairly thorough description of the company’s two investment plans.  To make our review of the program easier, I’m going to repeat that information here…

Forest4 offers two investment plans.  We are pleased to note that the website presents them in the clearest possible manner, each with an example of how the plan works.  The first plan is called “Plan Four” and, as the name might imply, pays 4% gross daily interest for 38 business days.  Your investment is returned as part of these payments.  The second plan is called “Plan 115” and it pays 115% after a period of 15 calendar days.  Your investment is part of this return.  Both plans have a minimum investment of \$20.  The sky is the limit on the other end.

The website claims that the Plan 115 is less profitable than Plan Four.  We will take a very close look at the relative profitability of the two plans as well as a number of other factors related to these investment plans when we review the Forest4 program within a few days from now.  For now, I will only note that, at first glance, it can be difficult to compare two investment plans such as these because they are of different types and, furthermore, because one is based on business days while the other is based on calendar days.  It is like comparing apples to oranges.  However, we will sort through all this in our review.  Please stand by…

Analysis of the Forest4 Investment Plans.

When I write these First Thoughts articles, I usually have done a few calculations on scrap paper on my desk which is why I made the comment about “comparing apples to oranges.”  Let’s dig into that a little deeper now and compare the profitability of the two investment plans.  We do this by comparing the average daily net interest (or profit) that you can earn from each of them.  The logic is simple.  If, on the average, Plan A puts \$2 profit into your pocket on a daily basis and Plan B puts only \$1 profit into your pocket, then Plan A is the more profitable one.  So, what we have to do is to determine this average daily net interest for each of the two investment plans.  We refer to this as DNI.  It is based on calendar days.

For Plan 115, this is very simple.  In the 15-day period of the investment plan, your net profit is 15%.  So, this averages out to a net profit of 1% per day; the DNI of this plan is 1%.

For Plan Four, things are a bit more complicated.  Since you earn 4% gross interest for 38 business days, the total gross interest that you earn will be 152%.  Since this includes your investment, your total net interest (profit) will be 52%.  Now comes the tricky part.  There are roughly 22 business days in a 30 calendar day month.  Therefore, to get the number of calendar days that are equivalent to 38 business days, you must multiply 38 by 30/22.  The result is that this plan is around 52 calendar days long.  Finally, if you divide the total net interest of 52% by the 52-day length of the plan, you get a DNI of 1%.  Amazingly, this is the SAME as the DNI for Plan 115.  So, the two plans are EQUALLY PROFITABLE.

Before we discuss this very interesting result, there is one more quantity that we should determine for the Forest4 investment plans: breakeven points.

For Plan 115, this is very simple.  Since you don’t see a penny of your earnings or have your investment returned to you until the end of the plan, this is when you will break even — after 15 days.  For Plan Four, if you divide 100% by the 4% gross daily return, you find that you break even in 25 business days.  Multiplying this by the 30/22 conversion factor, you get that the plan breaks even in around 35 calendar days.  As we discovered already, the 38 business day length of this plan converts to around 52 calendar days.

Discussion.

This is the first time that I have encountered an investment program that offers two investment plans that are equally profitable!  Plan 115 is NOT less profitable as the website says.  As we indicated in our First Thoughts article, the two plans are very different; they are apples and oranges and, in order to compare them, you have to clear the smoke.  We do this by determining the DNI for each of the two plans.  And, it works out that the DNIs are the same.

There is nothing wrong with this!  It is simply unusual.  But it is important for the investor to be aware of this fact.  His decision as to which plan to invest in will be determined by the TYPE of investment plan he prefers, not because of which plan is more profitable.  His decision will be determined by his “investment personality.”

OK, all this said, what are the pros and cons of each of the two plans?  In general, we recommend plans like Plan Four because you start recovering your investment immediately; the portion of your investment that is at risk decreases every day (every business day in the case of the Plan Four plan).  In the case of plans like Plan 115, your entire investment is at risk for the entire 15-day period.  In HYIP world, this can be a significant risk.  On the other hand, Plan Four is 52 days long.  THAT’S a very long time in HYIP world.  From that point of view, an investor might be attracted to Plan 115 and decide to invest once with it and then to quit (while he’s ahead!).  There is no hard and fast answer to these questions.  The way an investor decides, again, will depend on his personality.  All that we can say is that, for equal lengths of time (and assuming that the program doesn’t close), there is no financial advantage to either investment plan.

Perhaps the important thing to remember is that, for either plan, your average profit is 1% per day.  The plan that you choose will determine HOW YOU RECEIVE that 1%.

A DNI of 1% gives us an average weekly profit of 7%.  In HYIP Insights #23, we suggested aiming at programs offering investment plans that provide weekly profits roughly between 5% and 15%.  This level of profit was suggested as a compromise between a satisfactory level of income and risk of the program closing prematurely.  The fact that the Forest4 investment plans provide profit at the low end of this scale might imply that this program is less risky than many others and might therefore have a better chance at long-term survivability.

Earnings Examples.

Let’s assume that we invest \$100 in each of the two investment plans and see how things will work out.  However, always remember that you will be averaging 1% profit per day, whichever plan you choose.  That’s \$1 per day.

OK, for a \$100 investment on the Plan 115 plan, you will simply receive \$115 after 15 days.  That’s it.  A one-shot deal.  So, still once again, you can see that you averaged \$1 per day profit.

For a \$100 investment in the Plan Four plan, you will receive 4% of this every business day.  Of course, this is equivalent to \$4 per business day.  After 25 business days (around 35 calendar days) you will have received \$100 and will have broken even.  Finally, after 38 business days (around 52 calendar days) you will have received \$152 for a net profit of \$52.  You can again see that, like the Plan 115 plan, this averages out to a net profit of \$1 per day.

Conclusions.

The Forest4 investment program offers two very different types of investment plans that are equally profitable on a daily basis.  One is fairly long term (52 days) while the other is fairly short term (25 days).  Given that the plans are equally profitable, the choice of plan will largely depend on the temperament of the investor.

I hope this information is helpful.

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