No. I don’t need a full post to tell you this. Don’t invest in a High Yield Investment Program (HYIP). Their claims of 1% interest per day or 300% interest per month etc are pure bullshit. Now, there is a chance for you to make money in HYIPs. But the risks are so heavy and against you that you are better off putting your money in a fixed deposit or even under your pillow at home. I experimented with them by investing Rs.3000 of my money into multiple programs just to see how it goes. Read on to see how it went…
What is a High Yield Investment Program (HIYP)?
High Yield Investment programs have been around for ages, under different names. Have you ever heard of those
schemes scams where you are asked to invest in the stocks of an oil company in Arabia that pays 1200% returns?
HYIPs are just that, they are Ponzi schemes. They promise high returns and when they have made a good amount of money, the program shuts down and the person managing it vanishes. With the internet and globalization and bitcoins, it is easier than ever to run such scams
How does a HIYP work?
HYIPs promise to pay a really high return on your investment. This can range from a FD like 6.5% to sound authentic to as exorbitant as 3000% per month returns on your investment. Usual range is between 1% per day returns and 300% per month. As this is a lot more than what any other investment will offer, naive investors flock to HYIPs.
An example of one hyip scam running as of today
This site is called bitbankpro[dot]com. Their site says they are legally registered in Hong Kong. There are even a few certificates to prove this registration. They are promising to invest in crypto currency using an in house investment strategy. I saw them active on 4th Dec’19. Let’s see how long this program runs before the site is no longer accessible.
The promise HYIPs make is that they have investment managers who invest your money into complex projects, a diamond mine or even bitcoin mining. They show you registration certificates of closed companies in HK, UK or Switzerland to prove their authenticity. In reality, these are nerds sitting in one room apartment in Russia or Romania waiting to take your money.
When the program starts, you are asked to select a plan based on the number of days and amount you wish to invest. The program starts paying promised interest into your account. In the example shown above, if I were to invest $10, I will be getting $0.8 into my account with them daily. There will be a minimum withdrawal cap that prevents you from withdrawing it though. When you have enough to hit the minimum payout, you will be able to withdraw this money. If the program is in good status, they will pay out promptly.
This continues for a certain period until word of mount spreads and more people invest their money. Once the HYIP has a good amount of money in it, pay outs to you stop. In a couple of days from then, the website closes and that is the last you hear from them.
Do you stand to make money investing in a HIYP?
For you, no! There is a remote possibility for those who are tuned into this industry though. There are plenty of people out there, mostly in US and UK who try to game the gamers running such high yield investment programs. They invest very early into the program and try to withdraw the money as quickly as possible with profits before the HYIP closes. Investing earlier means, the person running the HYIP needs to payout to avoid negative word of mouth from spreading.
A study on high yield programs by two scholars from Cambridge University and the University of Munich shows that investments into such HYIPs are on the rise. According to them, even those who are aware of the scam and try to game it end up loosing money over a period time. You can read more on it here.
Another example of a High Yield Investment Program claiming to be investing in FOREX trading
This site is comextrades (dot) com and active as of 4th Dec’19.
My experiences with investing in HYIPs
I did invest in a couple to test the waters sometime back. To be very clear, I knew all about them and was aware of the risks when I did this. I had a few bitcoins sitting idle and Indian government had banned Bitcoins or trading with them. I decided to put some in HYIPs to see if I could get lucky in trying to game them.
I decided to invest a total of Rs.3000. Then, I split up the Rs.3000 and invested bare minimum into 4 different programs which were just starting up. These are the four: quadrolate (dot) com (3.6%/day), airbitclub (dot) io (1%/day), txiny (dot) com (30%/3 days) and chprety (dot) com (25%/week)
After accumulating the minimum withdrawal amount from txiny in 2 weeks, I applied to withdraw. The request was never processed. The site shut down 2 weeks from them. Quadrolate shut shop in a month, just about 2 days before my 30 days investment period was met. Chprety too ignored my withdrawal request. I got to withdraw Rs.600 from airbitclub. The program shut down a month later.
So of the Rs.3000 I had invested, I got back Rs.600 and lost the rest. If you happened to read the Cambride University article I linked earlier, this is actually better run rate than most!
HIYPs in India
I wanted to write this article after I came across a High Yield Investment Program running in India last week. They were promising a weekly return of 1% and what is worse was it was being publicly advertised on a popular Youtube channel with over 5 lakh followers and millions of views. That got me thinking that people should be aware of such schemes and not fall prey to such scams.
Always do your research, go with trusted Mutual funds or Fixed deposits if you are not that savvy an investor. Avoid any claims of such high returns.