HYIP- A High yield Investment or High Risk Investment?    by Jon52

The world at this point in time is going through its biggest economic recession. Productivity is at its lowest and unemployment is on the increase every day. This is the perfect playing field for the scammers and the investment frauds to play their cards. In such a situation, anyone who is hard pressed for money because of unemployment or sees his business going down by the hour, becomes restless and searches for alternatives around. Such anxious people are the perfect targets for the High Yield Investment Programs, better known as HYIP.
Few Facts about How HYIP Operates
The high yield investment programs are basically scams aimed at the population which is basically interested in making a fast buck. The companies which offer such schemes present a handsome return which is too good to be true. In some cases they offer interest on daily basis and with compound interest. The annual profits run in multiples of hundred %. They show that the profits are generated through FOREX trade and offshore investments.
The other fact about them is that they offer substantive bonuses for referrals. Each client that you bring in to their company will get you additional bonus. This is a big incentive for a person interested in making extra money.
Activities at Back End
What actually is happening is that these firms have no investments in any FOREX or offshore trading. All they do is get money from you and from your referrals. The older clients get paid from the revenue collected from fresh clients and the vicious cycle continues as long as newer clients keep pouring in. resultantly a time comes when the number of older clients exceeds fresh induction. This is the point where they take the money and make a run for it.
These operations have been seen to last for around 3-4 months or at the max 8-10 months, entirely depending on the influx of newer clients.
How to Identify HYIP Scam?
Here are a few basic rules for identifying a scam:
Rule #1: No business can pay an unbelievable high rate of interest. If the offered return is unbelievable then don. believe it.
Rule #2: If the site offering this service is comparatively new, like just a few months old. Chances are that it is a scam.
Rule #3: Any insecure site offering a financial transaction is an amateur site and not professional.
Rule #4: If the testimonials and forums are full of praises, it is most likely self generated traffic and should not be believed.
REMEMBER there is no business which can give its investors a very high rate of interest. At max a real investor company can give 6-8% return per year on your investments. Beyond that it is a scam.