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Lately, I have been receiving lots of questions. When reading them, I’ve started to realize that a part of my audience doesn’t understand the simplest aspects of investment. Influenced by these questions, I’ve decided to write this article that, as I hope, will open some investors’ eyes.
Investment is reallocation of funds.
It’s important to understand the following thing: HYIP investment (just as most of other investment types) is just reallocation of funds. In fact, when you invest in HYIPs (as well as PAMM accounts, Forex, precious metals and so on) you don’t produce and don’t create any value, which means there is no source of money here.
Thus, it is a closed-loop system and if you’ve earned more money, it means that someone else has lost it. It may seem that in order to gain profit, you should be more successful than at least 50% of investors, but that is not the case.
You should also remember that the funds are partly used to pay referral bonuses and that considerable part of the money is taken by the project administrator. It turns out that you should be one of 20-30% of lucky investors in order to be successful in HYIP investments. But it is commonly known that lucky are the strongest.
Why the strongest are lucky?
I often hear starting investors say: “I’ve tried investing in 1/2/3 programs, but I’ve got bad luck and lost money”. But at the same time, I know lots of investors, who keep generating profit. So, maybe, not luck, but approach to making investments is the case?
Of course, people who think that they invest in a real companies have wrong information and cannot assess their risk correctly. Therefore, their investments fully depend on luck. However, even people who realize that they invest in HYIPs make a number of mistakes as well, which make them dependable on luck.
The difference between successful and low-performing investor is in knowledge and experience. And if one has to get hard knocks to gain experience, useful information is widely available for free and one should just open it and study.
5 advice on HYIP investment.
I advise you to study information from different sources. Below, I will give you several advice that you should stick to.
On every blog and forum, experienced investors keep telling beginners about risk diversification. But despite that, I can tell you (from my experience) that only few investors have deposits in 10 and more programs (you can find a detailed article on using diversification for risk reduction here (for now, they are available in Russian only)). At the same time, the number of starting investors who uses other investment instruments besides HYIPs, is even smaller.
People often ask me: “Is it a reliable program?”, “Should I invest here?”, “How long do you think it will work?”. Such questions are usually asked by people, who want to choose the single most reliable program and make a large investment in it. But I can’t answer these questions. Moreover, even the program administrator cannot know for sure the lifetime of his creation (of course, in case he’s not planning early scam).
To keep your head clear of such questions, you shouldn’t stick to one program. Divide your portfolio in several parts and invest in several promising programs (15 relevant programs). This will enable you to reduce the risks and even if part of the HYIPs stops paying, other programs will bring you profit and save your money.
2. Older doesn’t mean better.
Once again, when people ask me about a program or recommend me something, they adduce the following argument: “It has been paying and working for 1/2/3 years already”. For some reason, many people think that the older the HYIP is, the more reliable it is.
I think the case is that all these people are scared of being conned and not receiving the promised payment. However, there is another thing to be afraid of – scam. Because no sensible admin will con his investor before time or cast a slur upon his program, as long as it can bring him profit.
If in case of a real company, the working period can really be considered the sign of reliability, everything is completely different, when we talk about HYIPs. The older is the program, the higher is the probability of scam. In an ideal scenario, you should invest in long-term HYIPs within the 1-3 months of their work.
3. Choose programs that take care of their reputation.
As I have already mentioned above, for such HYIPs it is unprofitable to con 1 person, who will spoil their reputation in future. But only serious programs have reputation that can be spoiled. Therefore, when selecting programs, check whether they are listed on the largest investment forums and blogs.
HYIPs use forums and blogs for promotion and attracting investors. But these instruments can also act against a HYIP, if its administrator decides to cheat.
Investors can post proofs of the program cheating, which will become its anti-promotion. Moreover, a forum’s moderator can mark this program as fraud, which will greatly damage its popularity.
4. There is no profit without losses.
I’m sure that most starting investors don’t know the right way to manage their risks, not least because they have never lost their deposits.
It’s the same case about sportsmen, who start paying special attention to warming up only after a serious injury. And scorchers, who are fond of speed, often start sticking to speed limits after the first road accident. The same thing happens with investors as well.
After several failures, the negative experience will hold an investor back and save him from excess risks. Mistakes are the best experience.
5. Education, education and education.
Of course, learning on your own mistakes is the most effective way. But it can be too painful. To avoid it, it’s better to learn on somebody else’s mistakes and get as much information about investments from various sources as possible. Don’t forget that knowledge is power.
You should read more blogs and forums on investment matters. Follow the latest news of the HYIP industry. Communicate with more experienced investors.
One of an investor’s bitterest enemies is emotions. They prevent you from gaining more profit and increase your risks. Therefore, don’t be greedy, be cold-blooded, learn, don’t give up and you will become a successful investor.