This kind of investment is usually a Ponzi scheme where the investor is made to believe that he/she will get very high returns from the investment made. This type schemes depends on paying the older investors from the investments made by the new investors. Hence it is a cycle and it gets extended as new people keep joining in to keep it going. Learn about the Most popular HYIPs here.
How it is done.
Initially a website it set up to advertise how they will provide you high yield on your investment. They show how interests are compounded everyday and how you would two fold or three fold of what you have put in within a short span of time. But the website will never mention how the operations take place, the people and management who deal with your investments, their location etc are usually not disclosed and these veiled transactions definitely can cause anyone to smell the rat.
These schemes have used fraudulent means to use financial instruments and make the people invest in their schemes. They make investors believe that they are financially sound.
These Ponzi schemes have been existent since the nineteenth century and now they have newer platforms to advertise such as the social media. They have now access to digital money and electronic transfer of money has made life much easier for them. These Ponzi scheme investors promising HYIP benefitted from the fact that many countries had laxity in the fraud laws. They have even ventured to being anonymous host to the participants of their website to get immunity from their investors.
Some knowing the fact that these ponzi HYIP schemes collapse, they invest early and encash before the bubble bursts and the schemers disappears with your money. This may not always workout as planned as poor timing may you lose out whatever you had. Tracker sites are said to help and know the current status of the investment but these can sometimes be not as accurate as anticipated. So your chances of making many more with these tracker sites may just go down the drain as there isn’t enough evidence to corroborate that they actually help. Learn about the Most popular HYIPs here.
How it is actually done
Here the investors are made to do an initial investment, the higher the investment the higher returns, where the interest is compounded everyday and added to your investment. You are made to bring in new investors and these new investors for the lifeline for such schemes where they become the payers for the older investors. When the flow of new investors fall, then the scheme also fall.
The characteristics of HYIP schemes
- The promise of high yield of investment with no risks.
- The returns will not change even if there are changes in the market.
- These HYIP will never be registered under a regulatory body.
- The strategies employed in investment plans in such schemes are kept hidden from the investor.
- The documents and papers are never shown to the investor.
- When encashing of the investment is always a tedious process.
Tips investing HYIP
- It is better to check the website before investing.
- To check out the address of the company before jumping into their scheme.
- Check out the bogus certificate that declares that they are them best in business.
- Who all are in the management and their credentials?
- Attractive women photos are posted on the website to lure investors in investing.
- Photos are photoshopped or identities are stolen or celebrities’ names are used for schemes stating that they are the prime investors etc.
- The site admins may not converse in good English, as such sites are mostly operated in Russia.
- The staff names do not have the google results.
- After the schemes recover their money that about in a fortnight’s time they vanish and you would be left fumbling in the lurch.
Hence it is advised to investors who have got involved in such schemes to report them to the police and not get stuck in such scams.