Whilst everyone is in search of a get rich quick scheme, High Yield Investment Programs or HYIPs seek to prey on necessity and human greed. They involve an investor paying money into an offshore holding account, usually from egold, in the hope of making massive returns.
What are High Yield Investment Programs or HYIP's?
High Yield Investment Programs or HYIPs regularly claim to make large sums of money from Forex trading. Some promise to pay investors as much as 6% per day. Based on a compounded interest and referrals, they are portrayed as a get rich quick scheme for investors.
High Yield Investment Programs or HYIPs are Predominantly Ponzi Schemes
The reality is that the overwhelming majority of High Yield Investment Programs or HYIPs are little more than Ponzi schemes. A Ponzi scheme is a fraudulent operation that uses money paid in by new investors to pay the high returns promised to existing investors.
Why Ponzi Schemes are Destined to Failure
The larger a Ponzi scheme, the more likely it is to be detected by the authorities. All Ponzi schemes are destined to collapse due to the unrealistic returns paid to existing investors. Eventually, there won't be enough new investors to cover the returns promised to existing investors. The web site will vanish and any money will soon be laundered and passed on to criminal organisations.
How to Identify High Yield Investment Programs or HYIPs Using a Ponzi Scheme
- Referral programs. All Ponzi schemes depend on new investors as it is their money that pays existing investors. High Yield Investment Programs or HYIPs regularly offer a 10% bonus for referrals;
- Unrealistic returns. If a High Yield Investment Programs or HYIP offers returns cumulatively amounting to several hundred per cent per annum, the chances are it is an online scam or Ponzi;
- Domain registration. A site, such as www.whois.net/ will be able to inform an investor how long a High Yield Investment Programs or HYIP has been in existence. The shorter the period of time they have been in operation, the more likely they are to be a Ponzi scheme. However, some Ponzi schemes can survive for many months;
- Dedicated or shared server. If an HYIP isn't run from a dedicated server, one should have doubts regarding the credibility of the operation. Many sites using a shared server operate several Ponzi schemes at the same time;
- Secure Socket Layers (SSL). If an HYIP isn't utilising SSL technology, it is more likely to be an amateur web site that is prone to hacking;
- Forums. Many High Yield Investment Programs or HYIPs have forums where existing investors will advise whether they have been paid or not. However, there are numerous bogus posts by site providers seeking to portray their Ponzi scheme or online scam as a good investment.
Whilst some High Yield Investment Programs or HYIPs aren't Ponzi schemes or online scams, they are very few in number. At the very least, an HYIP is going to be an extremely high risk investment. How else would an HYIP return 6% per day? Most things that sound too good to be true usually are!
Those seeking higher returns than from a savings account should consider a cash ISA or a stocks and shares ISA. These investments are both considerably safer than a HYIP or High Yield Investment Program. Always seek to make the most of tax-free savings, especially if a higher-rate tax payer.
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