The Mindhome Investment Plans.

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

For the investor, Mindhome offers four investment plans.  They are what we refer to as “perpetual” plans because, like a normal bank account, you make a deposit once and you earn interest on it forever.  Daily interest rates are lucrative, ranging from 6% to 9% per day.  However, in order to take advantage of the higher interest rates, high minimum investments are required.  To sweeten the pot, Mindhome offers a set of even higher interest investment plans for existing investors that reinvest their earnings.  These returns vary from 8% to 11%.

Here are the details of the four investment plans that are aimed at new investors.  We’ll briefly discuss the plans aimed at deposits by existing investors later.

  • Plan #1
  • 6% daily forever
  • $25 – $4,999
  • Plan #2
  • 7% daily forever
  • $5,000 – $9,999
  • Plan #3
  • 8% daily forever
  • $10,000 – $49,999
  • Plan #4
  • 9% daily forever
  • $50,000 – $500,000

Analysis of the Mindhome Investment Plans.

Let’s begin by simplifying things.  We always advise our readers NOT to invest large sums of money in ANY online investment program unless they are firmly convinced that it is as reliable as a person’s local bank or a corporation that is selling shares on the stock market.  Very few, if any, HYIPs are in this category.  So, for the most part, we should consider investing in an HYIP as a form of gambling (please see HYIP Insights #4 for our thoughts on that).  With this point of view in mind, we will not discuss Plans #3, #4, and #5 further.  With minimum investment requirements of $5,000 and much more, they are definitely in the “high investment” category and we do not want to encourage this level of investment in HYIPs.  It looks like investors in Mindhome agree with this outlook.  Although this listing changes frequently, the highest investment that is posted right now in the Mindhome website is $2,000, with the next lower investment being $150.

So, we will only be discussing Plan #1…

When analyzing an investment plan, we typically determine two quantities: the number of days it will take for it to break even and the average daily net interest (DNI) that you will earn from it.  If you divide 100% by the daily gross return if 6%, you find that you will have recovered your investment (broken even) in 17 days. 

Determination of DNI is impossible as it depends on BOTH the daily return as well as on the length of an investment plan.  Obviously, for a “perpetual” plan, the length is unknown.  What you are really looking for is an estimate of how long a program will survive.  Remember that we are gambling here.  The winners are the people who invest in a company that will survive for a long time.  The losers are those who invest in companies that close their doors very quickly.  Mindhome has been in business for a year or so.  On one hand, that might imply that they will be in business for a long time to come.  One the other, it might imply that the end is near.  Of course, there is no way to know the answer to this dilemma. 

So, the best that we can do is ASSUME different survival periods — different lengths for the investment plan.   OK, since Mindhome has already been online for roughly a year, let’s give them the benefit of the doubt and assume that the program might be on line for as long as five years into the future.  We’ll calculate DNIs for assumed lifetimes of 90, 180, 270, and 360 days and then for 2, 3, 4, and 5 years.  This will give us a clear indication of how time effects the DNI that you will earn from the program. 

Beginning with an assumed lifetime of 90 days, the total GROSS income that you could earn during this period would be 90 times the daily gross interest of 6%, or 540%.  This includes your investment.  So, you must subtract 100% to get the total NET interest that you will earn, or 440%.  Finally, averaging this out over the assumed 90-day life of the program, you get a DNI of 4.89% (440/90).  If you do this same arithmetic for the other assumed lengths for the program, you will get the following results:

  • Assumed Length         DNI
  • 90 days                        4.89%
  • 180 days                      5.44%
  • 270 days                      5.63%
  • 360 days                      5.72%
  • 2 years                        5.86%
  • 3 years                        5.91%
  • 4 years                        5.93%
  • 5 years                        5.95%

You can see that, as time goes on, the DNI that you will earn from this plan gets closer and closer to 6% — but never quite gets there.  In fact, after only one year, you are averaging close to 6% NET interest per day — which is pretty good.

We already mentioned that there is a set of higher interests on earnings that an investor reinvests.  Specifically, for Plan #1, the rate jumps from 6% forever to 8% forever.  That’s a very serious enticement for a person to reinvest his earnings. 

OK, we now have all the information before us on the Mindhome investment plans.  In Part 2 of our review, we’ll discuss it and point out what we feel are the pros and cons of the program.  Please stand by.  Part 2 will be finished in a few days.

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