{"id":1099,"date":"2017-05-31T04:27:15","date_gmt":"2017-05-31T04:27:15","guid":{"rendered":"http:\/\/emilynews.com\/blog\/?p=1099"},"modified":"2017-05-31T04:27:15","modified_gmt":"2017-05-31T04:27:15","slug":"hyip-insights-12-investment-formula-part-1","status":"publish","type":"post","link":"https:\/\/emilynews.com\/blog\/?p=1099","title":{"rendered":"HYIP Insights #12 — An Investment Formula Part 1"},"content":{"rendered":"

<\/a>The Goal of an Investment Formula.<\/strong><\/p>\n

I thought a lot about this one.\u00a0 And, the more I thought about it, the more I realized that it\u2019s really impossible to come up with a formula that we can just plug some information into and that will give us the result we are looking for — which , in our case, is a decision of whether or not to invest in a certain HYIP.\u00a0 Of course, this is the big question that investors wrestle with.\u00a0 The question of how MUCH to invest is secondary and we won\u2019t get involved with that here as it\u2019s more of a personal thing.\u00a0 A $100 investment might be a fortune for one person but peanuts for another.\u00a0 However, all investors — large and small — have to make the decision of whether or not to invest.\u00a0 Again, that\u2019s the issue that we\u2019ll tackle here.<\/p>\n

But, back to our \u201cformula.\u201d\u00a0 In engineering (my field), for example, there are formulae for all sorts of things. \u00a0If you know them and use them correctly, you will get very precise results.\u00a0 Unfortunately, in the HYIP business, there is no such animal which will always give you the right answer.\u00a0 Why?\u00a0 Because there are human beings running the show!\u00a0 Humans aren\u2019t robots that act according to mathematical or scientific law.\u00a0 Their actions are motivated by a host of unpredictable factors, the chief of which might be the desire for personal gain.\u00a0 And, this is often at the expense of others who will lose in the process.<\/p>\n

So, probably the best we can do is try to develop a procedure that we feel will MAXIMIZE our chances of selecting an HYIP that will survive long enough for us to realize a profit from an investment — ideally a considerable profit.\u00a0 This will be our objective here.\u00a0 But, as a disclaimer, we must never forget that, because this isn\u2019t math or science and because human beings are in the driver\u2019s seat, almost anything can happen.\u00a0 However, our hope is that by applying a logical approach to the problem of selecting an HYIP, we will decrease the unpredictable human element and increase our chances for a successful decision of whether or not to invest.<\/p>\n

In order to get my thoughts organized and to minimize the chances that I will forget something important when I write, I printed out a copy of previous HYIP Insights #8<\/em> (which you can find here<\/a>) entitled \u201cThe Wise HYIP Investor.\u201d\u00a0 You might want to do the same thing and also use it as a reference as you read this.\u00a0 This present article will build on The Wise Investor article and frequently, as we go along, I will simply refer back to the earlier article — just to keep the length of this one under control.<\/p>\n

<\/a>All about Interest Rates.<\/strong><\/p>\n

The interest rate that an HYIP offers will give you a pretty good idea of its chances for surviving in the long term.\u00a0 Is someone gives me $100 and I tell him that I will invest it for him and pay him interest every day for the privilege of using his money, it will be easier for me to pay him $1 (1%) per day than $25 (25%) per day.\u00a0 So, it is pretty obvious that, if a HYIP offers a very high interest rate, it might be difficult (or impossible!) for it to sustain this level of payment in the long term.\u00a0 Such investment schemes often rely on deposits from new investors to pay the interest due to earlier ones.\u00a0 This is what is known as a Ponzi scheme, named after Charles Ponzi, a businessman from Boston (USA), who in the 1920s used this system to earn a LOT of money for himself — for a while, until people got wise to what he was up to.\u00a0 So, an important issue that we will have to address in this article is what interest rates are apt to be sustainable and what rates are not.<\/p>\n

But, first we have to clarify something.\u00a0 When you study the investment plans offered by different HYIPs, some might provide a daily interest rate, some weekly, and some monthly.\u00a0 There are even some that pay interest earnings on an hourly basis.\u00a0 Furthermore, some plans return your principal at the end of the investment term and some return it along with your interest earnings.\u00a0 In addition, there are a few programs that I refer to as \u201cperpetual\u201d programs that never return your principal at all. But, the term of the program goes on and on until the program finally closes its doors.\u00a0 Well, all this can get very confusing because, in order to compare the interest rates of two or more programs, you have to be compare the same \u201ckind\u201d of interest.\u00a0 You obviously can\u2019t compare hourly interest rates with monthly interest rates as they are very different animals.\u00a0 You have do to some converting to get them both into the same form which, for this example, would probably be either hourly or monthly rates.<\/p>\n

In this article, we will convert all interest rates to DAILY NET INTEREST.\u00a0 Net means pure profit.\u00a0 Let\u2019s do a number of examples to see how this will work\u2026<\/p>\n

Example 1<\/strong>.\u00a0 Investment plan pays 1.5% interest per day for 60 days and returns your principal at the end of the plan.\u00a0 This example is easy.\u00a0 Since you are getting your principal back, all the interest you earn is pure profit.\u00a0 So, the daily net interest for this example is simply 1.5%<\/u>.<\/p>\n

Example 2<\/strong>.\u00a0 Investment plan pays 3.5% interest per day for 45 days but your principal is returned to you as a part of your interest earnings.\u00a0 Here your TOTAL GROSS interest earnings would be 157.5% (3.5 x 45).\u00a0 Since your principal is included in this, you have to subtract 100% (corresponding to your initial investment) to get the TOTAL NET interest you will earn or 57.5%.\u00a0 This is earned over a period of 45 days.\u00a0 So, finally, you divide 57.5% by the 45 day investment term to get the equivalent DAILY NET interest of 1.28%<\/u>.\u00a0 A few people might have been confused by these two cases.\u00a0 Example 2 pays a higher interest rate, but, since it includes your principal, Example 1 is actually a significantly better deal.<\/p>\n

Example 3<\/strong>.\u00a0 Investment plan pays 25% per month and returns your principal after 60 days (2 months).\u00a0 Since your principal is being returned at the end of the investment term (like Example 1), your interest earnings are pure profit.\u00a0 Assuming there are 30 days in a month, your average daily net interest rate is 0.83%<\/u> \u00a0(25\/30).\u00a0 So, even though this example has the highest numerical value for its advertised interest, its daily net interest rate is the lowest.<\/p>\n

Example 4<\/strong>.\u00a0 Investment plan pays 1.3% forever.\u00a0 This is an example of a \u201cperpetual\u201d investment plan.\u00a0 It\u2019s a little bit difficult to compare this to the other examples as the principal doesn\u2019t explicitly come into the picture.\u00a0 Such a plan might typically offer an interest rate on the low side, the explanation being given that it\u2019s a good deal as you will be earning interest on your deposit forever.\u00a0 It IS a good deal if the program is a survivor.\u00a0 If it isn\u2019t, it\u2019s a bad deal.\u00a0 But, this is the classic HYIP dilemma again and we needn\u2019t get into that.\u00a0 I think that I would treat this example the same way we handled Example 2.\u00a0 But, in this case, you would have to ASSUME a life for the program.\u00a0 This is equivalent to assuming an investment term.\u00a0 Just to put some numbers on this, let\u2019s assume that the program will survive for 6 months (180 days).\u00a0 So, the total gross interest you would receive would be 234% (180 x 1.3).\u00a0 Subtracting 100% to correspond to the return of your principal, the total net interest you would receive for the 180 day period would be 134%.\u00a0 Dividing this by 180, you would get the average daily net interest earned — 0.74%<\/u>.\u00a0 Next, suppose we assume that the program would survive for a year (360 days).\u00a0 Then the total gross interest that you would receive would be 468% (1.3 x 360).\u00a0 Again, subtracting 100%, the total net interest would be 368% and the average daily net interest would be 1.02%<\/u> (368\/360). \u00a0So, as you would expect, the longer the program survives, the higher the interest that you would earn.<\/p>\n

Well, it\u2019s easy to see that this can get a little bit tricky.\u00a0 However, I hope I have made the point clear that, in order to compare interest rates offered by different programs, you MUST change them all to daily net interest rate (or some other common interest rate).\u00a0 You have to compare apples to apples or oranges to oranges.\u00a0 You can\u2019t compare apples to oranges and expect to come to useful conclusions.<\/p>\n

OK, this is enough for starters.\u00a0 In Part 2 of this article, we\u2019ll take a look at interest rates offered by some programs that are running right now.\u00a0 Just like the above, we\u2019ll compare them after we have converted them to daily net interest rate.\u00a0 This will be interesting.\u00a0 I haven\u2019t done this yet for these programs!\u00a0 In fact, I think daily net interest rate might be a nice number to add to reviews of new programs as they come along.\u00a0 If the length of Part 2 doesn\u2019t get out of hand, we\u2019ll also take a look at ranges of interest rates that might be suitable for long term and for short term investments.<\/p>\n

*********************<\/p>\n

If you like this article, please share it by using the social media buttons below.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Goal of an Investment Formula. I thought a lot about this one.\u00a0 And, the more I thought about it, the more I realized that it\u2019s really impossible to come up with a formula that … HYIP Insights #12 — An Investment Formula Part 1<\/span>Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":311,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[113,10,54,114,26,53,90,91,24,103,25,97,109],"class_list":["post-1099","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-hyip-insights","tag-formula-for-investor","tag-hyip","tag-hyip-analysis","tag-hyip-formula","tag-hyip-info","tag-hyip-insights","tag-hyip-interest","tag-hyip-interest-rates","tag-hyip-news","tag-hyip-update","tag-hyip-updates","tag-hyips","tag-investment-formula","exalt-entry"],"yoast_head":"\nHYIP Insights #12 - An Investment Formula Part 1 - EmilyNews<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/emilynews.com\/blog\/?p=1099\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"HYIP Insights - An Investment Formula Part 1 : Different HYIP investment blog. 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