High Yield Investment Schemes

Recently, I seem to see quite a lot of High Yield Investment Programs around, guaranteeing returns of a few percent a day. I see such advertisements even on my University’s email public folders and I’m quite disgusted to see an increase in student scammers. Few percent gains each and every day adds up to very good returns. However, this sounds too good to be true and in my opinion, it’s merely a Ponzi scheme.

Basically, a ponzi scheme is a scheme whereby the founders try to get as many people to ‘invest’ into the scheme. Then, more people will hop on and invest, thereby paying the early members. However, the program will ultimately reach a point whereby total outflows will be more than total inflows and the operators will decide to shut down their operations, defaulting on payments to all members. This is what happens to most High Yield Investment Programs after some time.

With that said, it is possible to make money through such programs by being the early members and constantly referring members to the program, thereby extending the life of its operations. However, I would say that deriving income from such a program is highly unethical, especially if you keep on dragging people in when you know that it will fall some day. It’s pretty obvious that the people who make the most money from such schemes are the owners themselves and most of the general public just suffers. No value is created in such schemes.

Some High Yield Investment Programs also take on the role of autosurf programs to make you think that the payout is sustained by advertisements. However, anyone could probably guess that the standard advertising rate is probably not enough to dish out such large payments to all members. With that said, through time, such programs are destined to reach a shutdown point. The only chances of a program surviving would be in the exceptional circumstance where the program really does generate the returns that they guarantee. However, if anyone can generate returns at such insane levels consistently, he will probably rob the title of World’s Number Investor off Warren Buffett.

With that said, I might be just ignorant of the potential returns that various instruments can offer. However, personally, I won’t touch High Yield Investment Programs, because they make me feel uneasy. I have also seen the fall of several autosurf and other High Yield Investment Programs. My recommendation: stay away…