If I haven’t convinced you yet that HYIP’s (High Yield Investment Programs) are Ponzi schemes, then let me try again. The returns promised in these funds just aren’t possible. Here is an example.

PanaMoney Technologies, Inc. claims to offer up to 2.8% per day for investments over $20,000US. With this example, you would have $120,800US after 180 days and if you re-invested that amount, you would end up with about $730,000US according to the hyipinvestment.com calculator.

Even if you averaged 1% a day, a common promise of HYIP schemes, your $20,000US investment would be worth $156,800US after one year. The average house price in Vancouver is $500,000. If you were to invest that $500,000 at 1% per day, you would end up with over $2.3 million after one year. Who needs a 25-year mortgage?

Sounds incredible doesn’t it? Ask yourself this. If such trading programs were legitimate, why wouldn’t we all be investing in HYIP’s instead of in mutual funds, stocks and bonds? Or why wouldn’t other financial institutions be offering you competitive rates? Because it is impossible to deliver these returns on any kind of sustainable basis.

Here’s a guarantee you can believe in. If money grew on trees the way HYIP programs suggests it does, I would not be sitting here writing this blog. Instead, I would be retired, living in a multi-million retirement home on an exotic island somewhere in the Pacific.

To read previous posts on this and other topics, click on Let’s talk about investing.

Suggested Reading

CISC report confirms investment fraud on the rise

Scope of BC and Alberta's private capital markets

Talking Money and Finances with Your Children

More Resources

CRA tax scam warning and news from regulators

With the April 30 tax deadline closing in, we are reminding people to be on the lookout for tax scams. The Canada Revenue Agency (CRA) publishes a webpage with the top five tax scams, warning that these are illegal schemes that could have serious consequences if you get involved. In addition to fees you may […]

Give yourself the gift of financial life skills

How ever we mark the darkest days of the year, it seems that just about everyone now is focused on what gifts to give the people we care about. If you’re not already on your own list of loved ones, here’s a gentle holiday reminder from InvestRight: give yourself a gift that can help you […]