Way back in February of 2017, we published an article in HYIP Insights #4 describing what we referred to as the HYIP “Game.”  In it we compared investing in HYIPs to gambling.  Here’s the way we began that article…

Do you like to gamble? You probably do if you invest in HYIPs because they really are a “game” — a gambling type of game. Take a look at any respectable HYIP monitor. Do you find any HYIPs still online after six months or so? Most likely, the answer is “No.” All the games have ended. The gamble, of course, is whether or not you will break even or, hopefully, make a profit on your investment before the admin of his program decides that the game is over.

Some of these “games” barely last for a week. Some will last for a month or two. Very few will last for six months. And, only rarely, will a HYIP be around for more than a year. The goal of the investor is to choose programs that will be around long enough for him to make a profit. Ideally, he is looking for that very special program that will survive for a year or more and that will enable him to make a profit of many many times his original investment. We all know that this DOES happen, but not very often. However, this is the hope that is in the back of the mind of every investor when he plunks down his hard-earned money to invest in programs that he feels are likely to be winners.

Well, every “game” has rules.  Right now, the HYIP industry operates WITHOUT RULES.  What we would like to try to do in this article is suggest a set of “unwritten rules” that might be used to govern how an HYIP is put together and operated.  So, these are rules that ADMINISTRATORS of HYIPs should follow.  However, they will also be useful to investors because, if you see a program that is in gross violation of these rules, it should be viewed with question.  As you will see, most of the rules we suggest are matters of ETHICS.  I believe that investors accept the fact that most HYIPs will eventually close.  The suggested rules center around the idea that there should be winners in the game as well as losers.  That’s the way a casino operates.  Casinos are very successful “games.”  If everyone that visited a casino was a loser, the business wouldn’t be a very popular one.

Here are our proposed unwritten rules for operation of an HYIP…

Rule #1.  Administrators of an HYIP should be committed to keeping their program alive for at least one or two cycles of the longest duration investment plan that the program offers.  This eliminates what we in the industry refer to as “fast scams” — programs that close after only a few days of operation.  The ethical concept is that program Administrators should be thinking not only of their own profits but also of the success of their investors.  If at least early investors in a program can feel assured that they will come out ahead, the prospects are for huge growth of the HYIP industry.  I believe that this is what everyone involved in the HYIP “Game” hopes for.

At present, investors appear to prefer shorter-term investment plans rather than longer-term ones.  This is a probably the result of the poor track record of long-term survival of HYIPs in recent years.  An increased length of survival for the typical HYIP should greatly increase the confidence that investors will have in programs offering longer-term investment plans.   And, this could even improve the popularity of the HYIP industry.

Rule #2.   Administrators should avoid designing investment plans that offer interest rates which are obviously impossible to sustain.  For example, programs have appeared with investment plans that offer net returns that average out to over 50% of a person’s investment per day.  There is little, if any, likelihood that such returns are possible.  And, it is highly probable that such a program will be a “fast scam.”  A good reviewer of such a program will have to point this out to his readers.  These programs hurt the reputation of the HYIP industry.

Rule #3.  Administrators should avoid offering extremely high-risk investment plans where no returns (of either investment and interest) are made until the end of the plan.  Often such plans are accompanied by the promise of excessively high returns (Rule #2 above).  Again, a good reviewer will have to point out these negative factors to his readers.

Rule #4.  Administrators should avoid setting up investment plans with excessively high minimum investment requirements.  Many plans have appeared with minimums of $10,000; a few with a lot more.  We always advise investors against participating in such plans unless the program can provide proof that it is just as well-established as a neighborhood bank or a corporation offering sale of its stock.  Often such plans go along with the promise of excessively high interest rates (Rule #2 above) as a carrot to attract the unwary investor.  Typically, Rules #2, #3, and #4 will all go together to make what we call a “fishing expedition” where the program administrator is trying to catch a big fish and, if he is successful, he will close the program.  Still again, a good reviewer will have to point out programs that don’t adhere to this suggestion.

Here are examples of a sample investment plans that play by the rules:

Example #1.  110% after 10 days.  This short-term investment plan violates Rule #3, but this is  probably acceptable because the term of the plan is so short.  This plan has a DNI of 1%.

Example #2.  11% for 10 days, investment included.  This plan is equally profitable with the plan in Example #1.  However, it is a much better plan as the investor is recovering his investment on a daily basis and he will break even before the plan ends.  This plan obeys all the rules.  Of course, this plan also has a DNI of 1%.

Example #3.  4.5% for 30 days, investment included.  This is an example of a medium-term investment plan that obeys the rules.  Like the plan in Example #2, the investor recovers his investment on a daily basis and he will break even before the plan ends.  This plan has a DNI of 1.17%.  So, it is somewhat more profitable than the plans in Examples #1 and #2.

Example #4.  3% for 60 days, investment included.  This is probably still in the category of a medium-term investment plan.  It is designed in the same way as the plans of Examples #2 and #3.  So, it obeys the rules.  It will break even in 34 days, around half way though the plan — which is nice.  The DNI of the plan is 1.33% which is satisfactory (but not excessive) and which could lead the investor to think that this plan might be a good place to put his money.

Example #5.  2.5% for 90 days, investment included.  Now, we are probably getting into the realm of “long-term” investment plans.  Three months is a long time for an investor to commit his money to an online investment program.  Once again, this investment plan obeys all the rules.  It breaks even in 40 days, which is just about half way through the investment plan.  So, once again, you can see how an investment plan that returns your investment as part of your earnings minimizes your risk; even though this investment plan is three months long, your funds are only at risk for 40 days.  It also follows that you will have recovered half your investment after only 20 days.  So, even though this is a “long-term” investment plan, your investment is at risk for a comparatively short period of time.  The DNI for this investment plan works out to be 1.89%, significantly more than for the plan in Example #4.

Putting all this together, you might have observed that the five investment plans (or at least the last four of them) that I have described could be put together make a very nice investment PROGRAM.  The least profitable plan is the shortest-term plan and vice versa.  So, the increased returns from the longer-term plans would be the carrot that might encourage the investor to use them although, inherently, a longer-term plan is riskier than a shorter-term one.  Possibly in a group of investment plans like this, the more profitable longer-term plans might have SLIGHTLY higher minimum investment requirements.

I hope that this article will reach HYIP Administrators and that many of them will seriously consider adopting some or all of the suggestions that we have made.

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