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The Global Income Investment Plans.

In our recent “First Thoughts” article about Global Income, we introduced their investment plans as follows:

Global Income offers five investment plans for the online investor.  All of them are what we refer to as “perpetual” plans, meaning that, like a normal bank account, you make a deposit once and you receive interest on your deposit forever.  The difference, of course, is in the interest that is paid.  From your bank, you will only earn a few percent per YEAR while, from Global Income, you will earn between 5% and 15% per DAY. 

Here’s the detailed information on the five Global Income investment plans in table form:

  • Plan                 Interest            Investment Limits
  • Start                5%                   $5 – $499
  • Silver               7%                   $500 – $999
  • Gold                 9%                   $1,000 – $2,499
  • Platinum          11%                 $2,500 – $4,999
  • VIP Global       15%                 $5,000 and up

Analysis of the Global Income Investment Plans.

First of all, both to decrease the amount of work to be done in this review, as well as to make it more realistic, I’m going to eliminate the two highest interest investment plans from further discussion.  This agrees with our standing recommendation to the online investor which is to NOT invest large sums of money in ANY HYIP.  My feeling on this is that anything more than $1,000 is a lot.  Of course, this is a matter of opinion.  More or less than this amount might be the borderline for different investors.  However, let’s proceed with this limitation on our analysis. 

First, let’s see how long it takes each of the remaining three investment plans to break even.  Dividing 100% by the percent of your investment that you recover each day, you will get the following results:

  • Plan                 Interest            Break Even
  • Start                5%                   20 days
  • Silver               7%                   15 days
  • Gold                 9%                   12 days

Next, we typically determine what we call the average daily net interest (DNI) that you earn from an investment plan.  This is the total net interest that you earn from an investment plan averaged out over the length of the plan.  With “perpetual” investment plans, it is impossible to determine this very important quantity because you don’t know the length of the investment plan.  Why is DNI so important?  The reason is simple.  If Plan A pays you an average profit of 1% per day and Plan B pays you 2%, it is obvious that Plan B is twice as profitable as Plan A.  Always keep things simple.  DNI does this for you.

So, how can we cope with the fact that we don’t know the length of the Global Income investment plans?  To put it another way, how do we know how long this investment program will survive?  It is an unfortunate fact of life that, no matter what we might hope for, all HYIPs eventually close.  So, you are always gambling that you will come out ahead before a program shuts its doors.  The best that we can do in an effort to determine DNI is to assume different values for the lifetime of the program.  That’s what we’ll do here for these three investment plans. 

We’ll be generous and assume that the program will at least survive 20 days — which is the time that it will take for the Start Plan to break even.  Specifically, we’ll determine the DNI for each of the three programs for assumed lifetimes of 30, 60, and 90 days.  If the program survives longer than this, you will be well on your way to making sizeable profits…

Let’s begin by looking at the Start Plan with a gross daily interest rate of 5% and an assumed lifetime of 30 days.  The total GROSS income that you would earn from this plan for the assumed investment period will equal the daily rate of 5% times 30 days, or 150%.  Since this includes your investment, you must subtract 100% from it to get your total NET interest, or 50%.  Finally, dividing this by the assumed 30-day length of the investment plan, you get an average daily net interest (DNI) of 1.67%.  If you do this same arithmetic for assumed lifetimes of 60 and 90 days, as well as for the other two investment plans that we are considering, you get the following results that I have summarized below in table form.

  • Plan                 DNI (30 days)              DNI (60 days)              DNI (90 days)
  • Start                1.67%                          3.33%                          3.89%
  • Silver               3.67%                          5.33%                          5.89%
  • Gold                 5.67%                          7.33%                          7.89%

Discussion.

Looking at the foregoing table of DNIs, there are a number of points that jump out at you.  In general, the longer the program survives, the greater your profit will be.  If I had taken the table out farther, you would see that, ultimately, the DNI for each investment plan would home in on the gross daily interest for the plan.  However, it would take well over a year for DNIs to get close to these limiting values.  So, it might not make sense to discuss that further. 

Still looking at the table, it should be clear that, even after only 30 days, all of the investment plans are very lucrative.  But while it is nice to make a lot of money from an investment plan, the more lucrative a plan becomes, the riskier it becomes.  Way back in HYIP Insights #12, we suggested that HYIPs offering investment plans with DNIs higher than 2% might be unlikely to survive in the long-term.  With the exception of the Start Plan, all of the Global Income investment plans have DNIs in this range after only 30 days have gone by.  As time goes on, the plans become more and more profitable for the investor.  However, this increasing profitability (increasing DNI) also make the overall program a riskier one.

A final point about “perpetual” investment plans is that they offer no “relief” for the program.  An investment plan with a finite life frees the program from the obligation to continue to pay interest after the term of the plan ends.  This, obviously, doesn’t happen with a “perpetual” plan.  So, as time goes on, the financial obligation of this type of program to its investors continues to increase; it can never remain the same or decrease.  This can be a terrible burden on the program.  For this reason, “perpetual” investment plans usually go along with rather low interest rates.  Global Income is unusual in that it offers very high interest rates in conjunction with this type of plan.

Aside from the opportunity to possibly make a lot of money very quickly, high interest investment plans such as those offered by Global Income have the appeal that they break even very quickly.  Even the Start Plan has a break even point of only 20 days — around three weeks.  Also, since you are recovering your investment as the days go by, the portion of it that is at risk decreases very quickly.  This is always a strong point of investment plans, such as these, where your investment is returned to you as part of your earnings. 

Earnings Examples.

Let’s assume an investment of $200 in the Start Plan.  With a gross return of 5%, even though this is the least profitable of the five plans that are offered, the plan provides a more than satisfactory level of income.  I suspect that this investment plan might be the most popular of the lot.  If I’m right about that, it would tend to increase the life of the program as it would minimize interest payments that the program is obligated to make. 

OK, 5% of $200 is $10.  So, a $200 investment in this investment plan will get you a $10 return forever.  As we predicted in a table earlier, it will take 20 days for you to beak even — to recover your initial investment.  After 30 days, you will have made $300, for a net profit of $100.  After 60 days, you will have made $600, for a net profit of $400.  After 90 days, you will have made $900, for a net profit of $700.  So, even though this is the least profitable of the investment plans, you can still make a lot of money from it.  If you really want to think big (to dream a little), after a year (360 days), you will have made $3,600, for a net profit of $3,400.  This gives you a very clear picture of just how profitable this investment plan is.  It is surely a LOT more profitable than the “perpetual” investment plan that your bank has for you!

Conclusions.

Global Income offers five “perpetual” investment plans.  They are all very lucrative.  This is a plus, of course, as all investors would like to maximize their income.  However, along with this high profitability comes high risk.  Global Income will probably appeal to the adventuresome investor who is willing to take a risk in hopes of fast profits.  It will probably not appeal to the more conservative investor who will be content with smaller returns but with a lower degree of risk.

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