19 Jun What are HYIP?
What are HYIP?
A HYIP or high yield investment program is a type of investment that guarantees high returns on many types of investments. The way it usually works is that it pays the first investors with the money that the newer investor puts down.
Most of these HYIPs are quite the Ponzi scheme or an investment swindle that some say may have been named after Charles Ponzi; an Italian-American swindler who started this type of scam. Ponzi was arrested on August 12th, 1920 and charged with a variety of business scams. But not all of them. Some can make you a decent ROI.
So how does an HYIP make money?
Many HYIPs will claim that they are technology or management funds, or perhaps Forex traders and real estate companies. They behave in a similar manner as a chain letter where one person will invest their money after having seen and being confirmed that others do the same and so on. In this case in the process one or multiple investors need to cover the money that is to be given to the last investor. Everyone is encouraged to bring in a new investor so that the chain of events can make money for all.
The end result is that any money invested will disappear after a while. It is a short-lived, high yielding program with investment money coming in from different sources for up to 18 months at the most.
So why do people invest in a High Yield Investment Program (HYIP)?
The easy one word response is Greed. These people want to make lots of money fast! And sometimes it definitely can work.
There are two types of people who invest in Ponzi schemes:
- The Expert: A person who knows exactly what he’s doing. It’s a huge gamble and large risk and they know it. The tactic is to put money early in the game and to also remove the funds that have been accumulated early. They use good monitors to keep track of any good programs, like HYIP.
- The Novice: These are the people who hear how they can make their hard earned money work for them by investing it in a fund program that will grow fast. They are lured in via fancy websites and smooth talking individuals who guarantee all types of great opportunities to make money in a reasonably short time. Before they know it the novice will lose most, if not all of the money they invested.
Method used to Convince Investors
Those involved in the Ponzi scheme will convincingly present a 1% per day increase in return on the money that the customer invests in with no explanation on how that is done. The only thing that is disclosed is the name of several well known banks that are participating in taking in the money that is being provided by the investor and offering back high yield returns. These banks have no idea their names are being used for the scam.