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Investment Security Tips
We are not currently aware of any small Internet high yield investment program that offers real capital security. This is to be expected of course, as you would not be afforded capital security from most forms of investment, whether they are regulated or not. If you do find a HYIP that claims security to your capital, or some kind of guarantee against loss, you need to determine what exactly this guarantee is and how it is supposed to function.
A program may claim to offer an insurance guarantee of some sort, but in reality this is highly unlikely, bearing in mind that HYIP's are usually unregulated. A guarantee is not worth the paper it is written on (or website for that matter) if you cannot enforce it. If the HYIP operates out of an offshore jurisdiction, entering into a lawsuit in order to try to enforce a stated guarantee is likely to prove fruitless. Of course, you may be lucky enough to come across a HYIP that stands by their guarantee, but you are not going to know this until the time comes to actually put it into effect, which is not really a situation you want to be in.
If you come across a HYIP that you are interested in investing in and they happen to claim that they provide a guarantee of sorts against loss of capital, then ask them if they have ever had this guarantee actioned by any of their investors. If they state that some investors have used the guarantee in the past then ask for contact details of those participants so that you may contact them directly in order to verify those claims. Resign yourself to the fact that you are not going to realise any kind of capital security when it comes to the smaller, high return Internet HYIP's. That is why it is so important to diversify your investment through a number of the small programs, so that you are not relying solely on the returns from one or two.
The most important element of capital security is that which protects you from fraud and not necessarily from non-performance of the program itself. We have seen various purported methods of securing your capital, the most common one being the setting up of a sole signatory bank account, which is then scanned in order to confirm deposit of funds. It can be assumed that the program trader then uses leverage in order to generate the required returns. The only way a program trader could do this is by getting you to sign a letter of credit, which would be included with the other documents, guaranteeing the trade in some way. Then if the trade goes sour you may loose all or part of your funds. There are only a few programs that claim to operate in this way, and they usually require minimum deposits of $100,000 upwards. The minimum investment level will place these programs out of reach of many HYIP investors.
As far as we are concerned there is only one absolutely secure method of securing your funds, and still be able to generate above average returns, and that is to set up your own offshore company, with its own bank account and trading account. The company and associated accounts are yours; they will have been set-up separately from the high yield program. The program trader is then given a power of attorney to carry out the program trades through your offshore company trading account, but they do not have any authority whatsoever to move funds in or out of the trading account. You on the other hand have total authority to move funds wherever and whenever you wish.
You could also directly receive any trading statements, from whichever broker was handling the trading account. Most of these trading accounts also provide Internet access for checking balances and any other activity on the account, which affords you the added advantage of being able to check your account on a daily basis if you wish. The offshore bank account is also likely to provide such access, affording you total piece of mind and security over your account funds.
This is without a doubt the most secure way of funding a high yield investment program. It does not protect you from trading losses, but it does protect you from fraud. You are in total control of your bank and trading account, whereas the program trader can only place trades on the account, nothing more. It is not cheap or straightforward to set-up this type of offshore trading structure, but what price are you prepared to put on your capital security. A properly set-up structure will also impart certain tax advantages, which will far outweigh the cost involved in setting it up in the first place.
This kind of arrangement can only realistically be used for larger investments, as it simply isn't feasible otherwise, due to the logistics involved in managing numerous independent trading accounts. You will not find many programs that will even entertain this arrangement, as it places them in the awkward position of having to be paid by the investor, instead of vice versa. There are only a few programs that we have come across over the years that operate in this manner and ironically, they also appear to be the only large programs that we have seen that have generated consistent long-term returns in the region of 5% to 15% per month. Obviously no one that we are aware of has ever lost money with these programs, which is not surprising when you consider the capital security element attached to this arrangement. However, you should always be aware that past performance is not a guarantee of future performance.
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