High Yield Investment Programme

Several investment programmes touted over the Internet promise high returns for little or no risk. These investment programmes are also known as High Yield Investment Programs or HYIPs.

Many of these HYIPs offer attractive returns as high as 1% per trading day. When annualised, it is obvious that such returns far exceed the most generous yields offered by mainstream financial institutions operating in our financial markets.  Operators of these HYIPs provide little or no detail about themselves at their websites. To attract investors, they require only a small amount of money to be deposited with them.

The promoters/operators of HYIPs tend to be vague about underlying financial instruments used in their investment programmes and about how such high returns can be sustained.  Some might claim that their investment programme invests in complex financial instruments like prime bank instruments or private placement programmes. However, they do not give adequate explanation of how these financial instruments work.  Instead, they assert that such financial instruments are the “best kept secret” in the banking industry and only available to a privileged few. The potential investor is informed that banks and regulators would deny the existence of such financial instruments. The potential investor may also be told that he is extremely fortunate that the operators are willing to share this golden opportunity with a complete stranger like him.    

The truth is that all these claims are bogus.  Despite having credible-sounding names, such financial instruments exist only as figments of the fraudster’s imagination.  A number of these HYIPs operate as Ponzi scams. In a Ponzi scam, funds are collected from new investors and these funds are used to pay the returns promised to existing investors.  Often there is little or no investment made by the HYIP operators.  So long as there are fresh funds from new investors, the HYIP scam can be sustained.  Obviously, such a HYIP cannot be sustained indefinitely and it will eventually collapse.

Warning Signs Of A HYIP Being An Investment Scam

High returns with guarantee of no risk or low risk
Be wary of HYIPs that promise extremely high returns. Remember, investment programmes that provide expectations of high returns are often also high risk in nature.  A promise of unrealistic returns at little or no risk is a hallmark of a scam.

We would like you to invest with us, but we can't tell you much about ourselves
Operators of HYIPs often hide behind a veil of secrecy provided by the Internet. Beware of websites that do not provide an actual place of business as their business address.  If a local address is provided, verify that the company is actually operating there.  Exercise caution if the HYIP operator claims that its operations are based outside of Singapore .  Be aware that fraudsters may use business centres here or elsewhere as a virtual office to create the impression that they are operating in a particular location when they are not. Current technology allows these fraudsters to use mail services, faxes and telephone calls that can be easily routed to another country.

If the HYIP is a scam operated from outside Singapore , it is likely that your monies cannot be recovered and it may be difficult to bring the perpetrators to justice.

We promise high returns but do not ask us exactly what we do with your money 

Understand what you are getting into.  This is your money – do not be afraid to ask questions.  A genuine financial professional will usually be happy to explain in detail the investment programme he is marketing.  Alarm bells should sound if the promoter/operator of a HYIP tries to maintain an air of secrecy around the underlying financial instruments they offer.  Do not make a hasty decision. Do research to find out more about the HYIP that is being offered to you.  Seek professional advice if necessary.  The underlying financial instruments in the HYIP offered to you may be fictitious.