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Are you doing your Due Diligence? Everyone in the high yield investing words speaks about this. You have heard it many times - “Do your DD and you’ll be OK”.
Is this really true? You have seen many high yield programs fail even after the best DD. There is never guarantee. But think about it, if you could avoid 99% of the mistakes that the Due Diligencers do, you’ll have 99% better chance to make successful investment.
Here are the top 10 mistakes and myths in doing DD:
1. Low paying programs are more reliable
Low paying programs are just low paying. The low ROI alone does not prove anything and it is not advantage. The lower the program pays, the longer you need to be in profit, the bigger is the risk to loose. Of course you should spot the crazy paying programs as scams, but after that the ROI is not a criteria regarding program’s reliability.
2. The admin is honest (nice)
The admin’s behaviour has too little to do with the investment program credibility. Surely, with good psychoanalysis you could understand if the admin is mad or dishonest, but even the greatest and gentlest admin is not indicator that the program is for real
3. There is a phone, the program must be legit
Today you can get real but anonymous phone number for few hundreds of dollars. It could be call center, virtual office or other similar kind of service. You can’t track the owner of that number, therefore it is not helping you to track potential scammer. Very often the false investment programs give phone numbers with the only idea to gain trust and make themselves look real.
4. There is an office, the program must be legit
Getting an office is harder and costs more. But still it won’t help you tracking the thief. In many countries an office can be hired anonymously, and even if this option is not available, the thiefs use fake IDs (you can even purchase one online).
5. You can meet the admin, they are for real
Yes, if you can meet the admin, you at least know he/she is a real person. Can’t they disappear though? See the previous item about the IDs.
6. The admin can show incorporation documents, this proves they are for real
Option 1: The incorporation documents can be faked. Ok, you can eventually check this and spot them out
Option 2: The company can be real, but registered by phantoms. If you can’t track the person who owned the scam, you can’t do anything useful
Option 3: Ok, there can be a real company. And even then they can scam you - the HYIP history shows several cases in which the program simply start reporting losses. You can’t call the authorities against such company - because when invested you have agreed that losses can occur.
You can read about one great example of faking everything at here HYWD.info
7. The HYIP is paying for long time
This is certainly nice unless you are dealing with a ponzi scheme. The longer a ponzi pays, the lower is the chance for you to win when joining. Ponzis have lifetime, you know. Paying for long time alone does not prove anything.
8. Offering managed accounts means they do really trade
Offering managed account really proves that the company offers legitimate investment service. But this does not prove that their pooled (or whatever they call it) HYIP is also based on real trading. A very clear indication for fraudient scheme is when the managed accounts are producing losses, but the HYIP keeps paying just fine
9. They accept bank wires, so they can’t run away
They can run away if they want. I can name at least 5 HYIPs which accepted wires, but this did not stop them to disappear. Using bank makes the things harder for the scammers, but not impossible
10. They have referral program, must be scam
The affiliate marketing is one of the most powerful tools in the internet business. There is nothing wrong to offer referral bonuses for investors who bring other investors - this is a very effective advertisement method. The referral bonuses are red flag only when they are too high.
Are you doing your due diligence when investing? Are you following the myths?
Mbongwe, HYWD Blogger
Popularity: 3% [?]
Very nice article.
Of course you can fake everything, but i still think a program with phone/office or something else is more trustworthy than a Hyip without those information.
What else should be checked? How much posts the admin made in which forum - lol?
I think thats the whole thing about - knowing nothing - but hoping.
A quick comment that things like ‘nice admin’ CAN matter when it comes to those of us who are playing games - that becomes a form of ‘game due diligence’ by neccessity. Not a way to work out whether they’re real, but to work out whether new punters will be drawn into the game, which will make the game run longer.
In that case ‘due diligence’ morphs into ‘is this a good bet?’ (Keyword being: bet.)
Nice article mbongwe. That ought to be a checklist for most of us people doing DDs.
However, can we change the grammar from “doing DDs…” The grammaton inside me just shudder whenever I see such constructs (and it makes us look amateurish!).
I’m all for a use of phrasology such as “doing research,” etc. when using due diligence as an active term.
Has any program ever come out and posted a true trading log for members to view, or proven any true investment? I see that some info is given sometimes, but usually is followed with a NDA being signed, and none of that information is ever released.
I am sure that if a truely ‘legit’ program was releasing what they did with the investments, no one would invest in the program. The money would have to be in a super high risk position every week to return the 40% a month some programs offer.
Why would they even need outside capital? If they can return 50% a month $10k compounded for a year would give them $1.3 million. Really, I doubt they need your hundred bucks!!!
Nice point brought out Knon.
Most of the programs that would come out with true trading logs are those of forex tradings, but after being verified once or twice, they’ll stop allowing people to view the outcomes of their trades to stop people from talking.
Some HYIs even with real businesses and investments running, I highly doubt these programs will surface with how they are generating their profits in case of any competitions. Some ventures definitely need capitals from external investors if they are expanding or are requiring a big sum to even initiate; I wouldnt be complaining if most HYIs are doing this.
But most of them are not and its a really thin line between speculating(gambling so to speak) and investing. People might prove themselves with full transparency and access to accounts to let you see that they’re doing work, but things may still fold, people might not prove what they are doing but still pay you for years so to speak.
It’s really that thin line, but you’ll get better if you stay longer, I can’t explain why.
Chancer, I agree with your grammar comment - actually I don’t like the term due diligence at all. But its so widely used, so I thought it would make sense for anyone
Good points, Knon I always think in the same direction. But as Jude said, even with all the proofs the program can still go down
I’m agree on the fact there’s a lot of Myths in the DD. For instance serious investors used to think they’ll make more money with low rates programs cause they last longer than high rates programs… probably they last longer but not enough longer to be in profit or sometimes enough longer to make a little profit but at the end you can’t make a living with this and don’t get better results than with short-life high rates programs.
So thnx again mbongwe, I really appreciate your search.
From Knon:
”
I am sure that if a truely ‘legit’ program was releasing what they did with the investments, no one would invest in the program. The money would have to be in a super high risk position every week to return the 40% a month some programs offer.
Why would they even need outside capital? If they can return 50% a month $10k compounded for a year would give them $1.3 million. Really, I doubt they need your hundred bucks!!!
”
Probably I think by having more investors is to speed things up. With more cash put into trade, if the program is truely legit then they can earn from us investors some % profit as well as earn money for themselves but that is if the program is legit, then everyone gains.
Good points JS.
Most of the DD “myths” as you call them can be taken both ways, negatively and positively.
The majority of sites/admins that provide the “proof” or information are not our to scam you. While I do agree that some of the things listed can be falsified, I do not agree with how you are making it seem to the reader.
I think that what Israel left out is what he and other Admins like “Dust” or Dustin Fennell, are trying to accomplish in this industry, in trying to legitimize it. So am hoping that he will come back and post here about that.
js