Types of HYIPs

In general, there are three types of HYIPs that one can find online:

1. HYIPs based on real business
2. HYIPs based on reinvestments i.e. piggybacking ones
   
3. HYIPs created to scam i.e. Can range from ponzies to downright fly-by-nights
   

The first type, those that are backed by real business or trading activities, are the true form of HYIP. In real world, there are many type of business activities that are capable of generating sizable profits on a short run. The type of businesses can range from forex trading to sports punting. In the vast HYIP ocean, this group of HYIPs remain a small minority. A popular belief is that this type of HYIPs are suppose to last a long time. However, the truth is that even though they may be back by real business activities, it does not exclude from other forms of risks. Indeed, risks can come in many forms. These include risks from trading activities, risks from legal issues, risks from hackers, risks from unrealistic business plans (that can sometimes turn real programs into ponzies), and even risks from the members itself. Not withstanding the above, the chances of running into a problem can be heightened if the admin happens to be incompetent or inexperienced.

The second type of HYIPs, commonly known as reinvestments, are those that piggyback on the first, or even the third type of HYIPs. Consequently, there are compounded risks due to the interception of a middle person, so as to say. However, this does not mean that reinvestments cannot last or is no good. In fact, reinvestments operated by competent and honest admins can be as good as real HYIPs itself. Unfortunately, this is not always the case. Judging from the dynamics of the HYIPs out there, a large number of them appears to be reinvestments. This is particularly evident in the Autosurf industry, where the collapse of a large autosurf would almost certainly bring about a domino or ripple effect on other smaller autosurfs, thereby rendering "diversification" useless. Its not normally easy to identify reinvestments. However, one can roughly judge from the ROIs that a program is offering, which is always on the lower side compared to a big program out there.

The third type are by far the most commonly found HYIPs in the internet world. These are programs operated by scam artists and ponzi masters. These are schemes created to exploit two very fundamental qualities of a human soul, that is, Greed and Trust. Ponzi scams can come in a various forms. While the majority are downright identifiable scams based on Gold Coders' scripts, there are few sophisticated ones that are capable of immitating the look and feel of legitimate businesses. Its a common belief that investors lose in ponzi scams, and indeed, this is true for the majority. Compared to the first or second type of HYIPs, one may find that ponzies usually offer much higher ROIs and attractive referral commissions in order to attract investors. So, the question remains as to how one can take advantage of such offerings. Can one really earn without being scam? Well, the answer is yes, for most part of it. However, it depends on how the investor plays the game without falling into the trap of greed and trust. As many veteran investors used to say, get in early and get out quickly. Like traditional form of punting, there is an edge where investors may capitalize to enhance chances of winning. More on this will be discussed later.

HYIP - A Poor Man's Stock Market

In the previous post, we've discussed the impact of mindset and how it can determine a win or lose situation in HYIP. To avoid losing utterly in HYIP, it is absolutely necessary to switch one's mindset to perceive HYIP as mere punts and not some long term investments. This however, is not sufficient to ensure consistent win. As a matter of fact, investing in HYIP is not much different from trading stocks and forex. Its a poor man's stock market, and a highly lucrative one for those who knows the rules of the game. Similar to stock market players, the key to winning in HYIP is to be savvy at picking the best programs out there and exiting at the right time. In short, its all about Acumen and Timing.

Indeed, the trend is one's friend. This however, has an opposite definition in most part of the HYIP world. Move with the flow and go with the trend and you'll end up like most everybody else. As Warren Buffet so immaculately quoted: "Fearful when others are greedy... Greedy when others are fearful". This pretty much describe my take when punting on HYIPs.

Why People Lose in HYIP

Investing in High Yield Investment Programs (HYIPs) can be a great way to increase one's wealth within a short period. However, due to its high risk nature, most people tend to lose in the game. I've been in this arena for more than a year and have been scammed quite a number of times myself. New programs are always springing up and some even closed as soon as they started. No wonder why the HYIP arena is often touted as the concentration camp for scammers and ponzi masters. In fact, a large majority of the HYIPs that you can find online are ponzi-based. Despite the fact, however, the search of the next Holy Grail continues, and this only serves to fuel the vicious cycle.

So, the question remains as to how one can make profits from HYIP. To answer this question, I personally choose to look at why and how an average investor can lose money in HYIP. I've been researching on my own past failures and success, as well as those of some other investors, and came to the realization that the key to success or failure lies almost entirely with the mindset of the HYIP investor. Based on my personal experience, I would say that majority of the investors enters with the mindset believing HYIPs are investments. While it is true that there are some long or mid term HYIPs out there, most are short or even ultra-short term ones. Because of the difference with the mindset and reality, the net result is often a loss on the investors' end. To make things worse, many investors only invest by the later stage of the HYIP, when its already nearing the end of its life. So, you may ask why do they choose to do that. A quick check on many postings in the forums and monitors suggest it boils down to the investors' mentality in believing that HYIPs they invested can last longer that they thought, and so in believing that HYIPs are investments.

Many people feel they need a sense of assurance before they entrust their hard-earned money to HYIP admins. So, they monitor for weeks, if not months before they invest. Most started slowly and proceed cautiously. So, comes the pay day and they get paid. They are happy and so reinvested. Unsurprising, they got paid the second time and maybe the third or fourth time. At this point, greed got into them and they decided to invest one large sum. Coincidentally, this is usually the time when the HYIP got listed in the Platinum or Diamond category in many monitors out there. In the forums, one can see many cheer leaders cheer-leading the program and those who wrote negative remarks are often bashed. Then comes the next pay day. All of a sudden, the admin start giving excuses to delay payment. The kind of excuses can range from DDOS attack to egold account being hacked. At this point, commotion and fights between cheer-leaders and naysayers heightened to the point of no return. Days later, the program mysteriously disappears into thin air, and the word SCAM echoes throughout public forums and monitors.

Back to reality, if the above scenario sound familiar to you, or you are one of those who are constantly unlucky, you may want to take note of that.