How to distinguish, invest and earn
I think no one would refuse to increase their savings by 3-4 times in one year, moreover, in full liabilities. The desire to get easy money is a hallmark of most people. And the founders of hype, like no one else know about this desire and the desire of the population for freebies.
I am sure that each of you has come across HYIP projects that, impersonating real companies, promised to increase your contribution many times over. But is it true that you can really make money from them? Or is it all a solid scam? The answers to these questions (and not only) below in the article.
HYIP (HYIP) is an investment fund that works on the principle of a financial pyramid. The acronym HYIP stands for High Yield Investment Program.
In fact, the hype and the pyramid are one and the same. Such projects usually have a legend, with the help of which they explain to a potential investor about how the company makes money for payments to investors. I must admit that some of them really look quite real.
In fact, most HYIPs do not carry out any real activities and make payments to participants through new deposits. And if the project is conducting some kind of activity, then it is done to divert eyes and profit from it, of course, is not enough for payments to investors.
After there is not enough money from new investors for payments, the pyramid collapses. This phenomenon is called ‘scam.’ Most often, scam is protracted, that is, the project simulates technical difficulties, introduces verification, conducts some updates, etc., with all its might pulling its end.
How to distinguish a real company from hype
Sometimes it’s very difficult to distinguish a pyramid from a non-pyramid. And for this, one experience in investing may not be enough. Often you have to do a real audit of the company in order to get to the truth.
The most important difference is that the pyramid is more interested in attracting investment than in the implementation of core activities. Understanding this is not always easy. For example, you can read my review of one of the pyramids, which posed as a microfinance organization, had all the necessary licenses and registrations, and recently collapsed.
Even experienced investors take some hypes for real companies. For example, the ShareInStock stock exchange is served by almost all reputable sources among investors, like a real company.
But not all pyramids are organized specially. Someone does this by accident. I came across a case when a car dealer who brought cars to the city on a prepaid basis, for some reason, did not spend money from customers to buy cars. In order to get out of the situation, he had to bring cars to the ‘old’ customers at the expense of the money of ‘new’. So the pyramid was formed, for which the founder was then judged.
But such cases are more likely to be exceptions to the rules. Most hypes can be easily identified with the naked eye. Among the distinguishing features are:
- High profitability.
- The minimum risk promised by the company.
- The presence of an affiliate program.
- Lack of contract.
- Lack of physical representation at the company.
- The ability to replenish the balance using anonymous payment systems.
But, the presence of individual features does not make the company a pyramid, as the absence of all these features does not guarantee that it is a real company. But in most cases, using this checklist, you can identify the hype.
Types of hypes
First of all, HYIP projects are divided into low-income, medium-income and high-yield. The principle works perfectly in this type of investment: the lower the profitability, the lower the risks and the longer the life of the project. Therefore, the division by profitability is often replaced by the division by lifetime.
That is, low-income projects are called long-term, medium-income – medium-term, high-profit – short-term.
Such hype most often offer their investors the lowest interest rates. There is no clear division with what percent the project can be considered low-profit, and with which medium-profit. All this is conditional. I attribute hype to this type if it promises a return of less than 15% per month.
Such projects live longer than most, many for more than one year. But you need to understand that low profitability is not a guarantee of a long life. They can also become chipped just a few months after creation.
Such projects offer investors a yield of 15% to 60%. Most of the most popular projects are in this group. Such hyps offer pretty high returns to attract investors, and live long enough to gain popularity.
Highly profitable highs or ‘fasts’
Such projects offer a yield of 60% per month and have the shortest life expectancy. Many of them exist in just a few days and offer to double the deposit in a couple of days. Investing in such hypes is more like a gamble: if you manage to withdraw money or not.
The following division depends on the legend and interface. There are hypes with a legend, without a legend, but there are economic games with the withdrawal of money:
- HYIPs with a legend. The founders come up with a legend for their project, passing it off as a real company. According to statistics, from 25% to 50% are sure that they are investing in a real company, not a pyramid.
- No legend. The founders of such projects openly say that their project is a pyramid.
- Economic games. Now economic games in which there are no losers have become popular, and to start the game you need to make a contribution. But if there are no losers, then where does the money for payments come from? In fact, this is a normal hype with a game interface.
And the last division depends on the organization of the pyramid: centralized or decentralized.
- Centralized. All money is kept by the project founder. He can take them off at any time and flee abroad. But there is a plus – custodians will not steal money.
- Decentralized. All the money is in the accounts of the custodians. They themselves accept contributions and make payments to investors, transferring a small percentage to the founder.
How and by whom are HYIPs created
In order to create a hype you do not need a team or a large start-up capital. There are a large number of inexpensive scripts that will allow you to make a project with minimal investment.
Such a hype can be done even alone. The main problem is attracting investors. But the affiliate program solves this problem.
After the creation of the project, posts are ordered or created independently on the most popular investment resources: forums, blogs, newsletters, etc. The first investors begin to attract new members, hoping to earn on referral rewards.
Some projects are promoted in this way, while others are closed, without even paying back the initial investment.
Why is a legend bad
I am often asked how I feel about HYIP projects? I am normal towards the method of investing in the pyramids (neither positively nor negatively), but I am extremely negative about the fact that the founders are trying to convince potential investors of the legality of their company with the help of a legend. And below I will tell you why.
As I already said, from 25% to 50% of investors think that they are investing in a real company. And this prevents them from assessing the risks and correctly determining the amount of investment.
For example, if I know that I am investing in a pyramid that can collapse at any time, then I will invest a comfortable amount for myself, use the principle of risk diversification and, in the case of scam, I will survive this loss very easily.
If I am sure that I invest in a real company that even insures my contribution, then I am not able to soberly assess the risks. In pursuit of easy money, I borrow money or take a loan. Which in the case of scam leads to grave consequences. Remember that after the collapse of MMM, many people committed suicide.
Therefore, on the pages of this blog, I try to convey to readers the truth about projects so that they can soberly assess the risks, and only then make a decision.
Approaches to investing. Can I make money on highs
If you decide to invest your money in HYIP projects, then you need to understand what risk diversification is. Indeed, the application of this principle distinguishes the beginner from the advanced investor.
Most likely, the beginner will invest all the money in one project. But such a strategy will depend entirely on luck. Even the most detailed hype analysis will not give you a guarantee that the project will not collapse a week after your contribution.
But in order to get a decent profit, whatever one may say, you need to invest a large amount. Therefore, in order to minimize risks, investors apply the principle of diversification, that is, they break the amount into parts and invest in several projects at once. Some of them will be benchmarked, while some will be regularly paid for years. But in the end, with the right selection of hyps, you will remain in a good plus.
Strategies for maximizing profits
The profitability of a project investment strategy also depends on risk. The more risky the strategy, the more profit it can bring to you. You can reinvest all or part of the profit back in HYIPs. And you can completely withdraw money after each payment.
The best projects. How to choose
Of course, how seriously you approach the analysis of hypes in which you invest money depends on how much income you get in the end. But, as I said, several projects open daily. Therefore, to choose the 10-20 best from such an abundance is not an easy task.
But, of course, these 9 points do not guarantee a long life for the project. Because hype may have internal problems or the owner decides to take the money for himself and spend the next few years on the Caribbean.
There is also such a subtle point as the rapid burnout of a project’s potential. If a hype, which is not ready in marketing and technical terms for constant rapid growth, is gaining sharp popularity, then most often it cannot support this popularity growth and it simply does not have enough money to pay such a large number of investors.
On the other hand, if popularity is growing very slowly, then the project can also quickly become chipped.
Therefore, those hypes that have a relatively high potential and popularity are best, but it is important that it grows smoothly and without sharp jumps. This is the only way to maximize the chances of a long project life.
Where to find hyps
It is unlikely that you will be able to find good projects through monitoring hyip or forums. The best solution would be to follow the recommendations of reputable opinion leaders. Most often these are people who blog, video, post on social networks or newsletters, invest in hype, report on their income from investing and have a large audience.
After you have chosen a promising project, be sure to check it with monitoring and read its discussion on the forums.
In order to find out if the project is currently paying, you can use one of the monitoring. After you enter the site address in the search bar, you will see relevant information.
To be honest, a minority earns on hyips at the expense of the majority. This means that there is a redistribution of funds from beginners and unsuccessfully invested to professionals and lucky ones.
Earn only by investing (without attracting referrals), not everyone can here. Even experienced investors are always in the black just because they close their holes with the help of referral rewards.
Therefore, in order to earn on investing in HYIPs, you will need to be smarter than 80% of investors. To do this, follow these recommendations:
- Use the principle of risk diversification.
- Be very careful when choosing projects in your portfolio.
- Use the least risky investment strategies.
- Do not invest the amount you cannot afford to lose.
But on HYIPs you can earn not only by investing. You can also use such a win-win option for earning as referrals. In some projects, you can even work as a keeper, receiving an additional percentage from your entire cell.
I always said that hype is neither good nor bad. It is just a tool. Falling into the hands of a professional, he brings a high and stable profit. Therefore, either become a professional, or pass by this method of investing.