The CrystalInvestment Investment Plans.

In our recent “First Thoughts” article about CrystalInvestment, we introduced the company’s investment plans in the following way:

For the online investor, CrystalInvestment offers three different investment plans.  Minimum investments required for all of the plans are very affordable.  So, all of them are available to any halfway serious online investor.  In addition, all of the investment plans return your investment as part of your earnings — the best TYPE of investment plan.  Some quick calculations tell me that the plans are profitable, but not SO profitable that the program would have little or no chance of surviving in the long term.  A slightly confusing factor is that one of the investment plans pays interest on calendar days while the other two pay interest on working days.  This makes it more difficult than usual to compare the plans with one another in order to determine their pros and cons.  However, we’ll tackle this issue and also discuss other details of the program when we review it a few days from now.  Please stand by for our review of the CrystalInvestment investment program, coming up soon.

With this as an introduction, let’s put some numbers on the investment plans:

Plan #1
5.4% daily for 26 calendar days
\$10 – \$1,000

Plan #2
7% daily for 20 working days
\$50 – \$1,500

Plan #3
8.2% daily for 15 working days
\$100 – \$25,000

Analysis of the CrystalInvestment Investment Plans.

Plans #2 and #3 pay interest on working days.  Of course, this implies that their calendar day length is greater than the number of working days in each of the plans.  How much greater?  Since there are roughly 22 working days in a 30 calendar day month, you multiply the number of working days in an investment plan by 30/22 to get the length of the plan in calendar days (remembering, of course, that you only receive earnings on working days).  So, for Plan #2, you multiply 20 by 30/22 to get that the plan is roughly 28 calendar days long.  Similarly, you can determine that Plan #3 is around 21 calendar days long.

Next, let’s determine how long it takes each of the plans to break even.  For Plan #1, this is straight forward.  Just divide 100% by your daily return of 5.4% to get that the plan breaks even in 19 days.  For Plan #2, if you divide 100% by the 7% return, you get that it takes 14.29 working days to break even.  Using our conversion factor of 30/22, you find that this plan will break even in around 20 calendar days.  In the same way, you can determine that Plan #3 will break even in around 17 calendar days.

Of paramount importance in evaluating an investment plan is a knowledge of the average daily net interest (DNI) that you receive from it.  This is simply the total net interest that you receive averaged out over the number of CALENDAR days in the investment plan.  Obviously, if, on the average, Plan A pays you a DNI of 2% and Plan B pays you a DNI of 1%, Plan A is twice as profitable.  Very simple.

Getting back to the CrystalInvestment Investment plans, the total GROSS interest that you will receive from Plan #1 will be the daily gross interest of 5.4% times the 26 calendar day length of the plan, or 140.4%.  Since this includes your investment, you must subtract 100% from it to get your total NET interest, which will be 40.4%.  Finally, averaging this out over the length of the plan by dividing by its 26 calendar day length, we come up with a DNI of 1.55%.  For Plan #2, the total gross interest will equal the daily gross interest of 7% times the 20 working day length of the plan, or 140%.  Again subtracting 100% from this, you get a total net interest of 40%.  To get DNI, you must remember that we are averaging the total net interest over the CALENDAR day length of the plan.  So, for Plan #2, you get its DNI by dividing 40% by 28 to get around 1.43%.  Plan #3 will work exactly the same way and its DNI comes out to be 1.10%.  You might want to get out your calculator and check this.

Here’s a summary of all this very important information for the three CrystalInvestment investment plans:

Plan       DNI                        Calendar days to break even

#1           1.55%                    19 days
#2           1.43%                    20 days
#3           1.10%                    17 days

You can see that now it will be easy to compare the three investment plans.  We are comparing apples to apples, not oranges to apples.  Either intentionally or unintentionally, many investment programs camouflage the key characteristic of their investment plans.  CrystalInvestment did this by having one plan pay interest on calendar days and the other two pay it on working days.  The investor should always do the type of analysis we did here before making a decision as to which, if any, of a program’s investment plans he would like to put his money into.

In Part 2 of this review, we will discuss the results of our analysis of the CrystalInvestment investment plans and attempt to determine their pros and cons.  We will also work a few examples that will illustrate the type of returns you can expect to receive from these plans.  Part 2 should be ready in a few days.  Please stand by…

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