"What are High Yield Investment Programs :: HYIPs"

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I'm embarrassed to even talk about High Yield Investment Programs / HYIPs on this site, but since you're obviously researching income investing or you wouldn't be here, you'll probably find mentions of them on the Internet. And if you're like me, you're curious.

So I feel responsible. Like you, the words "high yield" catch my attention. So let my research warn you away from throwing away your money.

A HYIP is a Program With a Name and a Website Promising to Deliver Extremely High Returns

And they usually have very low minimum investment amounts -- even as low as US $10.

Now, that's very vague -- and that's the problem with a High Yield Investment Program. They ARE very vague.

Almost all of them had long FAQs. Usually only one question out of 30 or so addressed what they invested in. The other questions all concerned the technical aspects of sending and withdrawing money.

And the answer often raises more questions than it answers.

Some HYIP programs promote the classic financial fraud called "prime bank."

The SEC, the FBI and other law enforcement agencies regularly issue warnings on this one.

One interesting thing that HYIPs have in common is that they accept payment only in e-gold or e-currency or direct wire transfers. Not checks, not money orders, not Visa or MasterCard etc.

So, basically, an HYIP is any kind of alleged business or program which has a web site which accepts your untraceable money in return for a promise to use it to make more money than ordinary investments.

Typically, they promise -- yes, guarantee -- to pay you from 1/2% to 5% a day. Yes, I said a day. Some of the more "conservative ones" promise only 6% a week or 50% a month. Yes, that's far more than your local bank's certificate of deposit. It's also far more than Warren Buffett has ever earned from investing.

Ostensibly, you're usually investing in some type of trading activity, day trading of stocks or foreign currency (forex)

On its surface, this has some plausibility. It's somewhat equivalent to what mutual funds, hedge funds, commodity funds and private trading accounts do. They pool money to make investments and then distribute the profits.

However, what HYIPs invest in can vary a lot.

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