High Yield Investment
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Finding a legitimate high yield investment will take diligence, research, and, perhaps, a dose of recklessness. All investments typically fall somewhere on a risk/reward spectrum. One end of this spectrum can be labeled low risk/low reward and the other end can be labeled high end/high reward. Perhaps the safest place to invest money is in a savings account. But as account holders know, the interest rate on savings account is typically one to three percent. Certificates of deposit (CDs) also are considered safe investments and will probably earn a slightly higher interest rate than savings accounts. Stocks and bonds, depending on the particular company and other economic and political factors, are scattered throughout the spectrum. The stocks of well-known and long-established companies are known as blue chips because of their (relatively) reliable track record. Nearer the opposite end are penny stocks. These risky upstarts may or may not provide the high rewards that their investors are hoping to receive. Also at this end of the spectrum are high yield investment products such as junk bonds, currency futures, and too-good-to-be-true opportunities.
Individuals are advised by financial experts consider their own personal economic situations, tolerance for risk, and monetary goals when making investing decisions. Younger people have a long time horizon for saving for retirement and can afford to invest in relatively high yield investment products. This means looking for mutual funds with a historic record of more than ten percent. Higher returns on investment (ROI) means additional risk, but younger people have the time to make up losses. Someone who is planning to retire in a few years will want to move money into safer products even though at a lower ROI. For other economic goals, such as purchasing a home or college savings, experts often offer this general rule: money for short-term financial goals, to be used in five years or less, should be kept in safer, low-risk products. But money for long term financial goals can be invested in riskier products that, over time, will return higher yields than savings accounts and certificates of deposit.
When people talk about a high yield investment program, they usually aren't thinking in terms of a fifteen to twenty percent annual return. Instead, these speculators are looking for gains as high as three percent a day or fifty percent a month. Unfortunately, the vast majority of these so-called opportunities (which are popular enough to have an acronym HYIP), are scams that take advantage of gullible people. Instead of being tempted by get-rich-quick schemes, potential investors should heed the words of King Solomon: "A faithful man shall abound with blessings: but he that maketh haste to be rich shall not be innocent. . . . He that hasteth to be rich hath an evil eye, and considereth not that poverty shall come upon him" (Proverbs 28:20, 22). These verses tell the consequence for speculating in too-good schemes. Instead of untold wealth, most people who hand over money to these hucksters end up much poorer. About the only ones to make money from a high yield investment program are the slick talkers who convince others to give them money for a so-called sure thing.
The HYIP industry thrives, despite the illegalities that occur, because the ones who lose money are often too embarrassed to contact authorities. Additionally, victims may have persuaded family members and friends to "invest" in the "sure-thing opportunity." The unsavory characters perpetrating the scam will, at times, use intimidation tactics when victims threaten to expose the fraudulent scheme. The victimized individuals may fear being prosecuted for participating in the fraud. Despite the embarrassment and fear, however, financial experts and law enforcement officials encourage victims of high yield investment fraud to contact local authorities, the FBI, or the complaint center at the Securities and Exchange Commission (SEC). Though the victim probably won't recover the lost "investment," she may help prevent others from being victimized. The scams continue for another reason human nature. Individuals become victims because they want to believe the outlandish tales of offshore banking loopholes and secret international banking rules. But the primary rule of investing is this one: if something sounds too good to be true, it's not true.
On the low risk/low reward high risk/high reward spectrum, high yield investment products are as far removed from simple savings accounts as the east is from the west. Too many legitimate investing opportunities exist to risk money on a possibly illegal HYIP. To protect themselves, potential investors are advised to thoroughly check out companies before buying stocks or bonds. Important and relevant information on publicly traded companies can be found at the Securities and Exchange Commission's website. Instead of buying specific stocks or bonds, however, many experts suggest that investors put money into mutual funds. This way, the portfolio is diversified through ownership of shares in several companies. Individuals should never let themselves be rushed into making financial decisions, but should take time to understand the investments that are selected for their portfolios. If there is a place for a high yield investment in one's portfolio, then that individual should research the possibility of purchasing penny stocks or junk bonds. However, these purchases should be a small percentage of the complete portfolio and should be closely monitored for losses. HYIPs, though heavily promoted on internet sites, should be completely avoided. The promises of riches may be tempting, but risk of participating in an illegal scam isn't worth any reward.
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