What are H.Y.I.P ?
They are high yield investment programs (H.Y.I.P) and are supposed to generate
very high returns for investors.
The 10 reasons H.Y.I.P go bust are as follows:
- Unrealistic returns promised
- Lack of transparency
- Too much reliance on sponsoring
- Lack of training
- Little or no support
- Too little results
- Too many excuses for lack of performance
- No real products to promote
- Complicated compensation plan
- Greed from those at the top
1. Unrealistic promises of un-sustainably high returns on members investment is probably
one of the biggest reason that HYIP’s go bust.
Owners of these program often play to the gullibility and lack of financial smarts of their
investors and offer them unrealistically high ROI.
The program then fails to live up to its hyped offer and investors leave causing the HYIP
to go bust.
2. Lack of transparency makes some investors nervous and begin to label the HYIP a scam.
This often creates a mass exodus from the program and it collapses.
3.Too much need for and reliance on sponsoring! While it is necessary to add new investors
to keep the program building and paying the investors, this should not be the sole source
of income generated. The program becomes what is called a Ponzi scheme and dies off.
4.Lack of or inadequate training for members of the HYIP. If you don’t understand the
program you will not be able to explain it to newer members that you have invited in
and the investor base will stall.
5.Too little results! There has to be a reasonable balance between effort and rewards, so
if the HYIP proves too difficult to promote and earnings are too low then investors will
walk away to find something easier and more rewarding.
6.Too many excuses for lack of performance in the program.
Sometimes HYIP owners come up with many excuses why the HYIP does not yield as
promised, however, investors do not want excuses, they want results.
7. No real products or services to offer! This is closely tied to No.3 on the list above.
Often this is the number one reason that HYIP go bust.
The need for more recruits so that existing investors can be paid becomes
overwhelming and the program fails for lack of revenue.
8. Too complicated a compensation plan! Some of these programs have such
complex compensation plan that investors become frustrated and lose interest
in the program because they don’t understand it and cannot explain it to potential
new members.
I once heard a Network marketer say that if you can’t show someone your
compensation plan on a paper napkin then it is too complicated!
9. Lack of support!
Who you gonna call is a big issue with HYIP. There will be questions and
there had better be someone with the answers to help investors understand
the nuances of the program.
10. Greed and selfishness has killed off many HYIP.
As soon as some program owners see how much money is being generated by the program,
some of them begin changing the format and policies of the program to put more of the
revenues into their pockets and forget about the smaller investors who maybe working
just as hard to support the program.
HYIP are not inherently doomed to failure but just like any other business, they must
be governed by the integrity and responsible behavior of ALL those involved!
BS low – rationality high! Really good answer!