HYIPS Are Scams

I recently got an innocent-looking comment on one of my posts, and I made the mistake of approving it without checking out the website the person's name linked to. Turns out it was a "how to be a millionaire" blog (yes, another millionaire) and the guy was hyping something I had never heard of before- HYIPs, or high-yield investment programs.

I don't even know where to begin with these. The people who hype stocks all day are at least operating within the bounds of the law. HYIPS are nothing more than fradulent ponzi schemes. There is a great writeup on HYIP scams over at Quatloos, the "cyber museum of scams and frauds."

Basically HYIPs say they will return something like 1% PER DAY on an investment. They tell you that you need to pool your money with other HYIP investors, and your returns will be amazing. Lured in by the promise of easy cash, you send funds to these jokers, they make off with it, and you're left with nothing.

There are so many scams out there, and this one shouldn't be too hard to detect. First of all, any "guaranteed return" above that offered by US Treasury bills (currently around a 5% annual yield) should be looked at with extreme skepticism. Second of all, a simple web search for "HYIP" instantly reveals that they are, in fact, scams. No matter how well people try to dress them up, just remember that these things are just Ponzi schemes.

Take it from someone who has worked for a few Wall Street/financial firms, dealt with very rich people, and lived to tell the tale: there is no "magic bullet." There is no secret investment that rich people have access to that allows them to make a ton of money with no risk. Rich people get rich by having high paying professional jobs, starting their own businesses, inheriting money, buying the right piece of land/stock at the right time, writing best-selling novels, winning the lottery, etc... all of the other ways you already know about. You aren't going to read about the magic solution online. You definitely aren't going to read about the secret on a blog.