Back in HYIP Insights #21, we published an article entitled “A Safe Investment Guide.”  In it, we suggested a number of “rules” that we felt would increase the probability that a person’s online investment would be a safe one.  These guidelines were rather strict, meaning that they would eliminate many online investment programs from the investor’s consideration.  In spite of this, we noted that they were by no means a guarantee that, just because a program conforms to the guidelines, it would be a safe investment platform.

What I’d like to do in this article is suggest how the investor can apply the information in the Insights article when making the decision as to whether or not to invest in a company’s investment plan.

The first thing you should probably do is take a look at how long the program has been online.  Realizing that the lifetime of the typical online investment program is limited, you should be cautious about investing with programs that have been online for a considerable length of time.  How long is a “considerable length of time?”  No one knows the answer to this question.  You have to look for clues concerning the reliability of the company such as:

  1. Is the website script original or just a copy cat of other similar programs?
  2. How well-written is the website?  Does it appear that they don’t have enough information to hire a translator to put it into good English?
  3. Do the business claims of the program make sense?  If there is only a one-sentence description of the company’s business activities or if the description of what the company does is obviously nonsense, it is probably best to avoid the program.  Of course, we realize that the business claims of almost all online investment companies are fiction.  However, the company should at least present a coherent argument in its favor.

In short, you are trying to determine whether or not the program devoted a good deal of time and resources to the setup of its website, the implication being that they intend to stay in business for a decent length of time in the future.

Second, you should take a look at the TYPE of investment plans that the program offers.  The best type is the plan that returns your investment as part of your daily earnings.  In this way, you can break even well before the end of an investment plan.  Furthermore, you are decreasing the portion of your investment that is at risk on a daily basis.  The worst type of investment plan is the one that holds both your earnings and your investment until the plan ends.  Obviously, this type of plan puts everything at risk until the conclusion of a plan.  It is probably wise to avoid this type of investment plan unless, possibly, its term is very short.  In the middle are investment plans that DON’T return your investment until they end but DO provide earnings on a daily basis.  So, your investment remains at risk for the entire duration of the plan, although the earnings that you receive might enable you to break even somewhat before the end of the plan.  I would be careful about getting involved with this type of investment plan.  What about programs that offer a number of different types of investment plans?  I view these with skepticism as it would appear to me that they are just fishing for an investor and have not made a clear cut opinion as to which type of investment plan is best suited to the company’s method of operation.

Third, assuming that you have chosen the best type of investment plan (the type that provides a daily return that includes your investment as part of it), I would determine how long it takes for the plan to break even.   One of the suggested rules in the Insights article we are referring to was not to invest in programs unless you can recover your investment (break even) in less than a month of so.  In order to break even in one month (30 days), the daily gross interest that you receive from an investment plan must be at least 3.33%.  You get this by dividing 100% by 30 days.  Let’s round this off to 3% to make the numbers easier and say that we must receive this much in the way of a daily return in order for an investment plan to be acceptable.  The reason for this is simple.  Many programs close in less than a month.  The wise investor should be cautious as to the amount of faith he places in the future survivability of an investment program.  We suggest that a month might be about right.  Obviously, this assumption can be wrong; it might be either too high or too low.  However, we feel it is a good starting point for deciding on an acceptable breakeven point. 

Fourth, what about DNI, the average daily interest that an investment plan pays you?  In the Insights article we are referring to, we suggested NOT investing with plans that have DNIs greater than 2%.  Let’s see how this fits together with our imaginary plan that pays a daily return of 3%.  Suppose that the plan is 40 days long.  In that case, the total GROSS interest that you would earn from it would be 120% (3 x 40).  Since this includes your investment, the total NET interest that you earn would be 100% less than this or 20%.  Averaging this out over the 40-day length of the plan by dividing by 40, you get that a DNI of 0.5%.  You can do these same calculations for different lengths of investment plans to get the following DNIs:

  • Length of plan   DNI
  • 40 days                 0.50%
  • 50 days                 1.00%
  • 60 days                 1.33%
  • 70 days                 1.57%
  • 80 days                 1.75%
  • 90 days                 1.89%
  • 100 days              2.00%

Back in HYIP Insights #12, we suggested that programs offering investment plans with DNIs less that 1% would have a good chance of long-term survival while programs offering plans with DNIs greater than 2% might have a slim chance.  We felt that anything could happen between 1% and 2% — which, admittedly, is quite a large range.  It all boils down to the level of risk that the investor is willing to take.  Higher DNI means higher profit but, along with it, comes higher risk.

Note that, the longer the investment plan, the more days of “pure profit” there will be after the plan breaks even.  This is what makes the longer-term plans more profitable.  Of course, since they all pay the same gross daily return (3% in this case), they all break even at the same time.

Well, this is a summary of the thought process — and some of the arithmetic — that we feel should go on in a person’s head as he evaluates a program and its investment plans as a potential place to put a bit of his hard-earned money.  I note that this is essentially the information that we attempt to provide for the investor when we review a new online HYIP.  Of course, we can only provide the information.  The decision of whether or not to invest is always up to you! 🙂

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