How HYIP Makes Money – Are There Legitimate HYIPs?

Have you ever wonder how HYIP makes money? Why are they so promising on the surface but they steal and disappear after six months or a year? Are there legitimate HYIPs on the market?

How HYIP Makes Money - Are There Legitimate HYIPs


How HYIP Makes Money – Are There Legitimate HYIPs?

For those who do not know about HYIP, HYIP is known as an abbreviation of High Yield Investment Program. HYIP is operated based on Ponzi scheme. It is an investment scam that only delivers empty promises such as an unsustainably high return on investment (ROI).

An example is given below. This is a snapshot of what BTC Hourly offers. They promise ROI up to 9000% on its 60-day investment scheme. This translates into an annual uncompounded return figure that is unlikely to be possible by any legitimate investment program.

How HYIP Makes Money - Are There Legitimate HYIPs?


How HYIP Makes Money

The “business” model of an HYIP is based on Ponzi scheme. You often find these investment companies promises outrageous ROIs. HYIPs claim they are companies representing themselves as an Information Technology firm, Bitcoin investment fund manager, real estate company, or a Forex trader.

In reality, they work like a chain letter. One person invests money into the chain, another person follows. Let me give you an example.

  • I invest $100 with Company A, Jeniffer then invests $50. Company A pays $150 (my own investment with 50% coming from Jeniffer’s money).
  • Jeniffer waits until Adam joins Company A and invests $200. Jennifer then receives $75 (150% profit where 50% coming from Adam’s money).
  • Adam has to wait for new investors to come in to contribute and sustain the “investment” scheme.

This is the chain in action. A new investor (or multiple investors) are needed to cover what is necessary to pay the last investor. This is why very often these HYIPs offer referral programs to encourage you to bring in new investors. Below is an example of a referral program offered by Wealthy City Limited.

How HYIP Makes Money - Are There Legitimate HYIPs?

Should new money stop flowing into the system, the Ponzi will fail and collapses. In order to bring in more investors, there are a lot of fake HYIP reviews on the internet. These reviews are often written by its affiliates in order to make it looks like a legitimate program. They advertise various forms of this type of Ponzi. As long as there is new money flows in, profit can be made.

PonziScheme


What Should You Expect from an HYIP?

There is basically nothing you should expect from them. Eventually, they will one day disappear with your hard earned money. Most high yield investment programs are very short-lived and do not last more than 6 to 18 months.

Some people still believe that it is possible to make money from these HYIPs while they are still new on the market. Although most people are aware that HYIPs are mostly scams, they still put money in relatively new HYIPs and pull out their money early.

I wouldn’t recommend people to do that as it is a huge gamble and some “investors” have been blocked and banned from withdrawing their money.

There are numerous HYIP monitoring sites on the internet that you can track which high yield investment programs are paying, and which are not. Please bear in mind that these sites are not legitimate as some of them have been paid for fake reviews.


Why Do People Invest in an HYIP?

Greed.

Some people invest because they seek for quick money. There are mainly two types of people involved in HYIP investment scams.

  1. Experts: These people are aware of the risks of putting their money with these HYIP scams. They do know most of them work while they are still relatively new on the market. These “investors” invest they money as early as possible to the startup date and exit before the program reaches the “shelf” life. These people believe that it is possible to make money from high yield investment programs by investing only in new HYIPs and pulling out their money early. This is at best a huge gamble and a very risky tactic.
  2. Innocents: These people are totally unaware of the risks of putting their hard earned money with these HYIP scams. They invest base solely on the information presented on the fancy web pages without a thorough check on the companies’ backgrounds. Those who have not received their return on investment before the time expires, lose their investment.

How to know if an HYIP is legitimate?

It is essential to learn how to invest online without being scammed. Let’s try to find out the typical tricks these HYIPs use to trap the public.

Company Address

No doubt most of the HYIPs on the market do indicate the companies’ addresses.

How HYIP Makes Money - Are There Legitimate HYIPs

Just like you and me, we feel safer investing in an investment company with the above information. Companies such as BTC Hourly may also use some house address that is not real. Never treat an address as a sure sign that the company has a physical location but treat the lack of an address as a sure sign something is wrong.

Sometimes, if you can find an addresson these companies’ websites, try using Google Maps or a Google Search to determine if it’s valid, perhaps ask someone who lives in the area. If the address returns to a multi-business building, consider emailing one of the businesses and ask them if they could confirm that this HYIP firm is in the building

Certificate

Almost all HYIPs on the market show this certificate of incorporation of a private limited company. I bet you have seen this many times. Many HYIP scams that aim to steal your hard earned money will feature a ‘certificate’ on their website. These certificates can be bought for 15 British pounds through Companies House. The Companies House website.

Using the website you may search for a registered company by their registration number. Take note that anyone from around the world may create a company based out of the UK using false information.

How HYIP Makes Money - Are There Legitimate HYIPs

High-Yields

You often see these investment scams offer daily rates of return and cryptic with short and long term payout options. Some of them promised more than 50 percent return daily. Some of them offer 7, 14, 50 and 60-day payout plan that the return can go up ridiculously high.

Beware of those claims. Even a large company stocks, the average return is often less than 10% per year. Do not ever believe these so-called high ROIs as they are unrealistic figures. An example of high ROI by Amazing 5 is shown below. By the way, Amazing 5 is now officially shut down.

How to Invest Online Without Being Scammed

Unknown Methodology

You won’t be able to find clear information on how they allocate your investment. These HYIPs often hide this information from their investors. Not only that, these companies cloak themselves in secrecy regarding the fund managers and how they manage the money.

E-Currency Sites

It is common to find that most HYIPs require their investors to register and open an “e-currency” account. E-currency has been very popular and widely used by fraudsters. They demand payment in e-currency because, unlike with checks or credits cards, the charges clear instantly and cannot be canceled.

Another reason is there is currently no federal regulation of e-currency sites, many states require “money transmitters” to register with the state’s banking regulator. An unlicensed e-currency site is a red flag.

I have seen a lot of complaints about these  e-currency sites and one should question if these HYIPs are legitimate.

Referral Program to Recruit New “Investors”

Most of these companies offer an additional opportunity to earn extra money by recruiting new investors. This is a typical scam that runs Ponzi scheme. This scheme requires you to bring in new investors with new money injection into their system.

This fresh money is then used to pay off the earlier “investors”. The whole structure collapses when the cash outflow exceeds the cash inflow. That also means the entire system doesn’t work when there is no longer new “investors”.

Often the earliest victims of the HYIP are those who are the luckiest, but even that is unreal. Those at the top of the pyramid will usually earn the highest amounts due to their seniority in the structure. Those who are the latest usually lose every penny that they deposit, as the scheme collapses and the managers disappear among shades and winds along with client money.


Am I the Only One Against HYIP?

Of course not. Look at some of the comments made in those HYIP forums:-

How HYIP Makes Money - Are There Legitimate HYIPs

How HYIP Makes Money - Are There Legitimate HYIPs


Conclusion

I hope by now, you know how HYIP makes money from your pocket. My opinion is that most high yield investment programs are complex scams based on Ponzi schemes. So far, I have not seen any legitimate high yield investment program on the market.

BUT, there are legitimate Low Yield Investment Programs such as Genesis Mining – cloud mining company that share their daily incentive with their investors.

I was scammed before by some of these HYIPs. I am not a big fan of these investment scams even though I know I could make some extra cash when the companies are still new. I will not participate to encourage the growth of these non-legitimate online businesses.

I don’t like the reliance on a Ponzi scheme in order to make bad money. Instead, I do affiliate marketing (it’s different) and rely 100% on myself to build an income online. If you are interested in alternative ways to generate a real passive income online, you might want to consider running your own legitimate online business.

One powerful way to do this is through an approach called affiliate marketing. Affiliate marketing lets you earn money by promoting products from other companies. Any product you promote is going to be based on your opinion, and you are not required to stick with just one company.

If this is an area you’re interested in, you could learn more about this through my 7-day free email course. The guide is an excellent way to learn all the ins and outs of affiliate marketing and to get started in the field yourself.

If you are interested to know more how I make money through affiliate marketing, go here.

How HYIP Makes Money - Are There Legitimate HYIPs?

Summary
How HYIP Makes Money - Are There Legitimate HYIPs?
Article Name
How HYIP Makes Money - Are There Legitimate HYIPs?
Description
How HYIP makes money? Why are they so promising on the surface but disappear after six months or a year? Are there legitimate HYIPs on the market?
Author

Alex Y

Alex is the owner of Managing Your Finance. He helps newbies start their own online businesses. Sign up for his 7-Day Free training course and learn how to start making a sustainable income online and quit your 9-to-5 job.

You may also like...

2 Responses

  1. Yudhi says:

    HI Alex thanks for the information. I little bit agree with you but there is a company advertising platform called My Paying Ads offer such as what you said above. But this company show who is the owner of website even one of the member of my country has meet him. What do you think about it?

    • Alex Y says:

      Hi Yudhi, My Paying Ads is a type RevShare system that has been run under many names on the internet. The same system like My Paying Ads is where you buy ads to participate in a revenue share and you click on ads to create traffic for others that buy ads to participate in the same revenue share. It is basically a closed marketing system where you are marketing to other advertisers. If you want to boost your organic traffic, this not the program that you should be looking at. My Paying Ads generates near worthless traffic.

Leave a Reply

Your email address will not be published. Required fields are marked *

9 Shares
Share7
Tweet
+1
Pin2
Share
Stumble