HYIPs vs Banks

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HYIPs vs Banks

Some people prefer to risk the possibility of loss, rather than wait for a small percentage of profitability over a long period, and some, on the contrary, would rather trust their funds to professionals and get a small, but guaranteed income for a long period. Doesn’t resemble anything? This article is about hypes against banks. About their definitions and differences.

What is a bank

A bank is a financial and credit organization that carries out various types of operations with cash, securities and provides financial services to the government, legal entities and individuals. The bank was created in order to profit from depositors. What is not a financial pyramid? But with what. The bank is allowed at the legislative level with a special license to raise funds from legal entities and individuals for the purpose of their further use, but not to the financial pyramid.

The principle of the bank

We believe that it is important for every educated person to know how banks earn money. We explain it quite simply and clearly.

You “lend” money to a bank when you open a current or savings account. The bank gives you a small interest rate on this account. Let’s say 1%.

They give loans to people who buy houses, as well as other loans. They take, say, 7%.

As you can see, the difference between 7% and 1% is enormous. Consider minus the costs of maintaining branches and bank cash desks – this is their profit.

We give an example with numbers. If you deposit $ 100,000 in a bank account into a savings account, you can earn $ 1,000 per year. They lend $ 100,000 at 7% and get 7% – 1% \u003d 6%, that is, $ 6,000 per year from your deposit.

They explained in a fairly simple language how the bank makes money. So, once again, you lend them money that they “invest” by lending them and get 100% of the difference each year until the deposit term expires on the contract and you withdraw the money.

What is hype

HYIP (HYIP) – this is not a word, but an abbreviation, which stands for High Yield Investment Program from English – which literally means a highly profitable investment program.

Hyps in the common people and at the legislative level are called financial pyramids.

Hypas position themselves as investment projects that offer everyone who wants to make a deposit in their fund and quickly increase their capital. We hasten to warn you that there is no real activity behind such projects and there cannot be any. They work at the expense of subsequent investors (the principle of the financial pyramid).

Hyp working principle

Almost all financial pyramids are built according to the so-called Ponzi scheme (a famous adventurer of the beginning of the 20th century), which the creators try to hide from potential investors in one way or another. The principle is to constantly attract more investors, due to which interest is paid to those who previously invested in a financial pyramid. In order for profitability to remain at the same level, an increase in the number of participants is required.

Such structures are called pyramids for the reason that the lion’s share of financial injections is received by a small top, including, as a rule, the creator of this same financial pyramid and a small group of participants (depending on the level of the financial pyramid). In fact, almost everything can be compared with financial pyramids. For example, the dollar, banks, but they have a certain illusion of stability. It happened historically.

Which is better

We cannot give you a definite answer to this question, because Conclusions should be made by everyone for himself. It is logical to assume that we will be more on the side of hyips than banks, because We have been blog monitoring investment projects for more than one year. Our choice fell on HYIPs for the reason that here you can get more income in a short period of time than in banks for a long period. In banks, you can lose time and earn a small percentage (not taking into account inflation) for a very long time.

Conclusion

The article turned out not to be educational, but to express its point of view regarding banks and financial pyramids. We hope that everyone can make a choice for themselves and the article was useful and interesting for you. In the end, I would like to repeat that almost everything is a financial pyramid, the same banks and the dollar currency.

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