Extremely risky investment projects: why they exist

A person with free money or, as it is also called, rental capital, has thousands of options for investing funds. As a rule, more profitable projects have a higher risk of losing investments, while less profitable ones, such as a bank deposit, shares of global companies or government bonds, are relatively reliable.

Among the offerings are also HYIPs, or "hype packages ." These are analogous to the financial pyramids known to everyone since the 1990s. Their distinguishing feature is the promise of interest rates far exceeding what is realistic. Other hallmarks of pyramid schemes are also present: the lack of actual activity generating profit, interest payments based on new deposits, and sudden closure, leaving thousands of investors high and dry.

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There are many HYIP projects . Some of them directly admit they are Ponzi schemes. Others invent fictitious cover stories, such as cryptocurrency trading or stock market manipulation. In reality, all HYIPs operate according to a similar scheme. But if they are Ponzi schemes, why do people continue to invest in them?

Reasons for the existence of “hype”

There are several reasons. The first is low financial literacy, which provides pyramid schemes with a target audience not only on the Internet, but also in the real world. Even a person familiar with the history of MMM may not think that he is now investing in a similar project.

Secondly, the organizers of “hype” campaigns skillfully manipulate their target audience, promising almost daily payments and extremely high interest rates. HYIPs may have beautiful websites, good reviews, fictitious payout statistics - all this works for new investors, like a red rag for a bull. The fact that some HYIP projects only work for a couple of days or a week is silent.

Thirdly, there are investors who understand the work scheme and try to make money on projects until they are “closed.” But in this case, there are always risks of “not guessing” or getting too carried away, which is why investments are called extremely risky.

Finally, the organizers of such projects in the virtual world do not bear any responsibility before the law for organizing pyramids and attracting other people's funds. Moreover, they can create such “hype” one after another. It’s difficult to catch them in the act, and it’s impossible to get your money back.

Risk Warning

Of course, “hype companies” make money from people’s thirst for easy money, naivety and low financial literacy. And as long as people take money into pyramid schemes, nothing will change either in the real world or on the Internet. At most, the projects will have different “wrappers” and more substantiated promises.

If you, understanding all the dangers for your capital, still want to try yourself in this segment of “investment,” it is not recommended to invest amounts that you cannot safely lose. Trying to recover lost money by investing in new projects is also not worth it - this will only make the situation worse.