High Yield Investment Programs (HYIP) Due Diligence
Known for the exceedingly high yields one can generate from high yield investment programs (HYIP), HYIPs have also been implicated in a lot of scams wherein the money put in by investors is not actually invested. What happens here basically follows a Ponzi scheme, wherein the money paid out to current investors as return for their capital actually comes from the money brought in by new investors. This tends to prevent an HYIP scam to last very long, because sooner or later the number of new investors declines, leading to a reduced amount of money circulating within the system. This eventually leads to the inability to pay out current investors, making them pull their money out and further compounding the scam. Needless to say, these HYIP scams are illegal.
However, not all HYIPs are scams. That is, some HYIPs really do invest their investors’ money in capital management schemes such as FOREX trading, the stock market, sports betting, metals trading, and so on and so forth. Therefore, as long as an investor takes due diligence and stays away from scams, he or she can make tremendous profits from his or her investment.
Due diligence is the method and process by which an investor studies and examines a possible investment venture. By this, he or she looks into and reviews a seemingly lucrative prospect, and determines the soundness and strength of the real investment opportunities of a particular program. This is also used to weigh up the risks involved with this prospect, as well as the team that the investor will be dealing with. In other words, it is one way whereby an investor learns all he or she needs to know about the investment prospect before shelling any money out into the investment.
Not surprisingly, due diligence is considered by most to be the most critical stage in making an investment, and it must be done the instant an investor finds a particular investment prospect interesting. Fortunately, an investor does not need to personally meet the company’s team or see the business in operation to perform due diligence. The internet should be enough for an investor to thoroughly investigate a program.
First off, the investor must take a look at the program’s website. Usually, scammers have websites which are not professionally designed, tend to fail continuously, have haphazard navigation systems, and appear to have poor security. They also tend to have cheap scripts and old templates with vague and customary FAQs. Furthermore, they tend to offer astoundingly high profits and yields, and provide no definite names and contact information.
One can also visit online forums to research on what people can say about the program of interest. It is important to rely on not just one forum, and to make sure that the forums which one visits are professional, reliable, well-known and trusted, particularly by individuals of similar interests. Examples include HYIP Discussion and Golden Talk. Aside from forums, an investor can also utilize monitoring sites to exercise due diligence.
An investor must also look into how a website used to look, using what is called Way Back Machine. Because some scammers claim to have been around for a long time with websites to boot, one can look into the veracity of this with the aid of Way Back Machine, which has in its archives about 50 billion websites documented since 1996. Basically, one has to determine if the contents of the website at different times match, with special emphasis on contact information provided.
In line with this, it is also necessary to ascertain a program’s domain registration date. One can do this using WHOIS information, which can provide complete information on the program, including telephone numbers. This information can be used to determine if a company has indeed been around for as long as it claims, or if it will be around long enough to deliver certain long-time plans which it offers. Lastly, an investor must call the given telephone number to see if the number really belongs to the person indicated in the WHOIS information.
It is a must that an investor asks for a copy of the company’s documents and to verify these said documents. These include a valid business registration certificate, the company’s financial records, and a list of the banks which the company deals with. Lastly, it is crucial that the validity of these documents is confirmed by contacting the institutions which issued these documents.
