Difference Between HYIP and LYIP

Updated: 09/07/2006 11:46
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There was a discussion on one of the forums, concerning the problem of HYIP and LYIP, a real meaning of these two terms and phenomena defined by these terms. In general, investors have offered various classifications and various explanations, and it appeared that investors look at this problem from quite different angles of vision. So, what should be a key point in defining the type of the program? Of course, interest rates.

Someone started this discussion with an assumption that HYIP programs should be termed as LYIP (low-yield investment) programs, because 2-3% daily offered by an average HYIP program make less profit compared to some other fully legal and semi-legal opportunities. In fact, HYIP programs offering 2-4% daily do not offer something extraordinary, especially in comparison to other opportunities that offer twice as much or even more hourly.

The major point of discussion was the definition - why programs paying 2-3% daily should be termed as high-yield investment profit, while there other types of investment activity that bring a lot more? Of course, definitions and terminology are necessary, but terms and notions never change the essence and the nature of the event discussed. It seems that the key point of this discussion should be shifted to the question of higher or less risk level, than higher or less level of profitability.

At first, those people who equalize HYIP to risky investments and LYIP to safe investments, accordingly, are mistaken. This is not always true, but at the same time, any type of investment becomes risky as soon as it starts to bring high ROI. Consequently, investors should take the risk, because the risk level increases while interest rates grow. This is a cornerstone of these markets.

Thus, HYIP doesn't necessary mean something risky, as well as LYIP doesn't mean something that is necessary safe. We may only speak of a higher or lower risk level. Of course, HYIP may be dangerous. But you should see the edge and define those programs that you want to invest in for yourself. It will help you combine various alternatives of receiving profit. Not just a profit, but a stable profit, which is a purpose and a key point of any investment strategy.

There upon, let HYIP programs be treated as LYIP, the risk degree remains the same, in comparison to banks or mutual funds, for instance, or forex trading. It is customary to see dependence between the profit offered by a program and the risk of investing in it. And it is well sound.

Another investors participating in above-mentioned discussion offered to treat programs paying a couple of percents monthly as HYIP, and to terms programs offering more as ponzis. Well, as it has already been said, terms are not really necessary here, because ponzi schemes deserve to be termed HYIP more, than more or less reliable projects, offering 2-4% monthly. You may call them this or that, it won't change anything :)

But this discussion touched upon another very important and reasonable question. It seems that every program of this industry has something special, some kind of a secret allowing admins produce profit and share it with you. But at the same time it means that each of those programs doesn't need to offer this opportunity to investors. As one of investors calculated, one may make $10, 000, 000 in 2 years, having started with $10 and making 60% monthly.

Probably, you have heard a lot of ballads and myths about why and how. For instance, a story that USA government uses investment to provide dollar with a status of a world currency, hiding this fact, and getting rid of those who dare say something about it. Or secret bank tools, instruments and schemes - a lot of explanations exists. But the question still remains relevant.

So the question is as follows: why these investments are necessary? Why these guys need them? That's simple: 60% of profit means also 60% of loss. And when the program administrator says that he provides 60% of profit, it means that he should also provide 100% and spend 40% for losses or otherwise. In other words, he should combine all these necessary operations to provide functionality and stability, which is impossible without additional funds received from investors.

Of course, risk is high and the higher interest rates are, the more dangerous HYIP program is. It's inevitable, actually, but if administrators are a little more sincere towards their investors, this issue will be easier to resolve.

To sum up all above-mentioned and to extract a lesson from all these considerations, which is evidently the most important element of this article, we want to remind you again that there is no one universal rule helping to earn without losses or avoid scam artists.

You may call program HYIP or LYIP, or ponzi, or pyramid and make a profit, and you may well lose with a program paying 10% yearly, because low interest rate is not a guaranty of project's stability, and it won't prevent admin from running with your money. You are the person who makes your choice, do not forget about it.


About the author

Eric Marriam is a young writer. Even though he is not experienced he is able to make really high quality work. Eric is able to identify a problem people have and break it down, able to appeal to emotion through emotive writing, can change style of writing to cater to different audience. Eric Marriam is able to work creatively and effectively with staff and managers and despite his young age, he proved to be a clear and effective writer and speaker, committed to maintaining quality and efficiency, seeking for professional growth and development.
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