The LedGeneration Investment Plans.

In our recent News Commentary #706, we noted that LedGeneration has radically changed their investment plans from long-term 180 business day plans to relatively short-term 20 business day plans.  So, our original review of the program is no longer useful and it is time for a new one.  That’s what we’ll do here…

About the only features that the new investment plans share with the old ones are the names — Cold, Warm, and Hot — and the fact that earnings are paid on business days rather than calendar days.  Other than that, everything is new.  Oh yes, there is a fourth new investment plan called the “Personal” plan that has a minimum investment of $50,000.  That’s a LOT.  If you feel that LedGeneration is as safe to invest with as is your local bank, then you might want to use this plan.  If you don’t, then steer clear.

All of the LedGeneration investment plans now return your earnings at the conclusion of a plan — after 20 business days.  And, they all pay  daily interest — on business days.  Here’s the information on the three plans:

Cold
1.45% per day
$10 – $999

Warm
1.65% per day
$1,000 – $9,999

Hot
1.85% per day
$10,000 – $50,000

Analysis of the LedGeneration Investment Plans.

Let’s first see how long it takes each of the plans to break even.  Specifically, it would be good to know if a plan breaks even before the end of the 20 business day term of the investment plan.  By the way, you can convert 20 business days to calendar days by multiplying by the conversion factor 30/22 (since there are roughly 22 business days in a 30 calendar day month).  So, the plans are all around 28 calendar days long.  Looking at the Cold plan first, if you divide 100% by the 1.45% daily rate of return, you get that it would take around 69 business days for the plan to break even.  This is obviously a LOT longer than the 20 business day length of the investment plan.  So, you will not break even before the plan ends and will rather break even after the plan ends in 28 days — when your investment is returned to you.  How much do you earn before a plan ends?  Simply multiply the daily rate by 20 to find out.  If you do this for the Cold plan, you get that you will have recovered 29% of your investment by the time the plan ends.  If you do this same analysis for the other two investment plans, you get the following results:

Plan                       Percent of Investment Recovered

Cold                       29%
Warm                    33%
Hot                         37%

So, a disadvantage of these investment plans is that they don’t break even until their conclusion.  Although some of your investment is returned to you over the course of the plan, the greater part if it is at risk until a plan ends.  A far better arrangement is a plan with a higher rate of interest that permits you to recover your entire investment before it ends (with no return of your investment at the conclusion of the plan).  In this manner, the portion of your investment that is at risk quickly decreases as the plan progresses.

A very important factor in evaluating an investment plan is the average daily net interest (DNI) that the plan pays you.  Net interest is, of course, profit.  Assuming the program survives for the 20 business day investment period, and since your investment is returned to you at the end of the plan, you can say that your daily earnings are your profit.  We base DNI on calendar days.  So, for example, to get the DNI for the Cold Plan, you would divide 29% (your total earnings for the investment plan) by the 28 calendar day length of the plan.  The result is a DNI of around 1.04%.  If you do the same arithmetic for the other two plans, you get the following:

Plan                       DNI

Cold                       1.04%
Warm                    1.18%
Hot                         1.32%

Discussion.

First of all, we should note that the $10,000 minimum investment for the Hot plan is probably so high that almost all online investors will be unable to take advantage of it.  In fact, as I already indicated for the “Personal” plan with a minimum investment of $50,000, plans with high minimum investments should be scrutinized extremely closely — to the same degree as you would scrutinize a bank before making a deposit.  Of course, LedGeneration might be such a company.  You have to do your own due diligence and make the determination for yourself.  I am only speaking in terms of generalities here.

In HYIP Insights #12, we suggested that programs offering investment plans with DNIs between 1% and 2% might have a good chance of long-term survival.  LedGeneration is certainly within this range.  In fact, the Cold plan, which will probably be the most popular plan, has a DNI of only 1%.  BY HYIP standards, this is conservative.  The flip side of the picture is profitability.  A daily profit, or DNI, of around 1% translates to an average weekly profit of around 7%.  This should be adequate to keep most HYIP investors happy.  It is also within the range of sensible profits (5% – 15%) that we suggested in the article in HYIP Insights #23.

Earnings Example.

As an earnings example, suppose that you invest $100 in the Cold plan.  Every business day you would receive a 1.45% return or $1.45.  This would continue for 20 business days, by which time this would total to $29 (20 x 1.45).  On this twentieth business day you would then have your $100 investment returned to you.  As indicated earlier, 20 business days would be equivalent to 28 calendar days — roughly a month.

Conclusions.

LedGeneration recently changed their three investment plan offerings from long-term to relatively short-term.  A disadvantage of the plans is that they don’t break even until they end.  However, although the minimum investment required for the highest interest plan is extremely high, all the plans offer sensible interest rates that would appear to favor long-term survival of the overall program.  This program might appeal to a wide range of online investors.

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