The DF Capital Investment Plans.

In our recent “First Thoughts” article about DF Capital, we summarized their investment plans in the following way:

DF Capital offers four investment plans.  They all pay interest on a daily basis and return your investment as part of your earnings (the best type of investment plan!).  The plans are medium to long-term, running from 40 to 70 days in length.  Interest rates run from 2% daily for the 70-day plan to 3.3% daily for the 40-day plan.  A quick mental calculation tells me that the net returns (profits) from these investment plans are at a very sensible level that should give the program the potential for long-term survivability — which is what we always hope for in an HYIP.  There appears to be an unusual feature (not a bad one!) about these investment plans that we’ll discuss in detail when we review the program in the next day of two.  Please stand by…

Here’s the complete information on the four DF Capital investment plans as it appears in their website:

Plan #1
2.0% daily for 70 days
\$10 – \$500

Plan #2
2.5% daily for 60 days
\$501 – \$3,000

Plan #3
2.8% daily for 50 days
\$3,001 – \$5,000

Plan #4
3.3% daily for 40 days
\$5,001 – \$10,000

Analysis of the DF Capital Investment Plans.

Let’s begin our analysis by determining how long it takes each of the DF Capital investment plans to break even.  It really isn’t necessary for us to do that as each plan has a calculator associated with it that can be used for this purpose.  You just select a date during the term of the investment plan and the calculator will tell you the gross profit you have received by then — as well as your deposit.  All you have to do is to vary the date until the profit is greater than your deposit and that’s when you break even.  The calculator even gives you the number of days that it took to break even.

But, let’s assume that we don’t have the calculator and do this long-hand.  It’s a very important thing for the investor to know how to do.  And, nothing could be simpler.  You simply divide 100% by the daily gross interest that an investment plan pays and you will get the number of days it takes for the plan to break even.  For example, in Plan #1, you divide 100% by 2% to get that the plan breaks even in 50 days.  Repeating this same calculation for the other three plans, you get the following results:

Plan       Break Even

1              50 days
2              40 days
3              36 days
4              31 days

The next thing we usually determine when analyzing a program’s investment plans is the daily net interest (DNI) that it pays you.  This important quantity is simply the total net profit that a plan pays averaged out over the length of the plan.  Comparing DNIs is the only way to accurately compare the profitability of two different investment plans (as well as their relative risks).

Let’s again look at Plan #1 as an example.  The total gross interest that the plan will pay you is the daily gross interest of 2% times the 70-day length of the plan.  The result is 140%.  To get the total net interest, you have to subtract 100% from this to account for the fact that gross interest includes your deposit.  The result is a total net interest of 40%.  Finally, to get the average daily net interest (DNI) that the plan pays, you divide 40% by the 70 day length of the plan to get around 0.57%.  Doing the same arithmetic for the other three plans, you get the following:

Plan       DNI

1              0.57%
2              0.83%
3              0.80%
4              0.80%

Do you remember that, in our “First Thoughts” article, I indicated that there was something unusual about the DF Capital investment plans?  Well, here it is.  Three of the plans are EQUALLY profitable!  This is extremely unusual and in Part 2 of this review we’ll discuss what this means to the investor — as well as a number of other characteristics of the DF Capital investment plans.  Please stand by…

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