Risks of online investments
First and foremost you must understand that the
reward is directly proportionate to the risk. That is what speculation is
all about; you cannot expect to make a substantial return if you are not
prepared to accept a certain amount of risk. Any experienced financial
speculator will tell you that successful speculation involves being able
to quantify risk. The amount of risk attached to any particular HYIP, is
for the most part, unquantifiable. Many of the genuine small Internet
based HYIP's are considered high risk, as they are not particularly well
thought out programs, often with no sound methodology from which to
generate returns. They receive thousands of small deposits from
participants, which only adds to the problem. The larger specialist
programs, many of which are not plugged on the Internet, can be much safer
in many respects, as they are usually run by professional traders who know
how to generate returns using sound trading methods. They keep a low
profile due to the risk of interference by some authorities, but this does
not mean that they are not genuine investment programs.
There is
yet another type of HYIP trading program which allows you to set up your
own offshore company and a bank account, the funds are then traded through
this account, but the program administrator and/or trader never has any
kind of access to your funds, he/she only has the authority to place the
trades on the account. This method of funding is without a doubt the
safest that is available to the HYIP investor. The only risk is that which
is attached to the trading method used to generate the returns, although
most professional traders will operate with specific risk parameters in
mind.
The program administrators should also be forthcoming about
how they intend to generate the quoted returns. You should be extremely
wary dealing with any HYIP that refuses to disclose details about their
system, after all they are asking you to show good faith in them by
investing your hard earned money, so they should at least be willing to
tell you how they intend to generate the quoted returns. Once you know how
a program works, you are in a much better position to be able to assess
the viability of that program. For example there is one HYIP that claims
very high returns from investing in domain names. This type of HYIP might
have been feasible a few years ago, but is highly unlikely to be
profitable these days. There have been many high profile court rulings
against domain name speculators over the last few years, and registering
domain names is hardly an area that requires specialist knowledge and
expertise.
As a rule the larger the sum of the investment the safer
the program is likely to be, assuming that you are afforded adequate
capital security. The frauds are usually the ones that request small
investments and membership fees, as well as offering referral fee
arrangements. Programs operating in this manner can draw in a greater
number of participants in a short time before shutting down. The larger
programs tend to be much more professional, with their focus on making
steady returns for investors and taking a small part of those returns as
their profit. Most of the larger programs also appear to understand the
need for frequent client communications, which is often an area of
complaint amongst many of the smaller HYIP's. Usually your only source of
regular information is the HYIP website (assuming they have one), and in
many cases these websites are not updated as frequently as they should be.
By "The Best HYIP GUIDE"
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