It very obvious that all HYIPs are risky. But than again, so are stocks, bonds, mutual funds, Forex trading, and most other investment platform. Itís just that in this case.
However, if you make intelligent, well thought out choices, you stand the chance to make lucrative profits quickly.
High Yield Investment Programs usually involve in a variety of high risk and volatile field of investment such as FOREX Trading, stock exchange sports betting, Meal trading, etc. There are also HYIPs that do not invest at all, scammers. From these facts, you can easily realize that there is always a risk associated with investment in HYIPs.
If you are not able to control these risks, you will lose your hard earn money badly. For that reason, you should be able to implement mechanism to manage and minimize these risks to the bearest minimum. The most effective way of minimizing these risks is Diversification.
Diversification as applied to HYIPs is a technique employed to minimize the risk by diversifying or spreading your portfolio over many programs to avoid excessive risk associated with HYIPs. In simple terms this means do not put all your eggs in one basket.
There are certain issues you should consider on how to diversify your portfolio over different programs. Let us examine these issues one after the other
- Determining how many programs you should have, obviously diversifying over 10 programs is better than just investing into 2 programs. It is even better to have 20 programs instead of 10. As far as HYIPs it concerned is that you have to diversify your portfolio over researched programs as maximum as possible.
- Investing in old and new programs. That is try to mix your investment between old and new programs. It is always recommended to mix your favourite HYIPs with new programs.
- How much to invest between each programs. It is obvious that you should diversify your portfolio over several programs according to the programs credibility. But, you should be careful not to over invest in a particular program.
Let say for instance you have & programs and your portfolio is $1,000. It is not advisable to put $450 in a single program while investing $50 each between the 7 programs. You should make a balanced investment. Balance in a sense; spread your portfolio proportional to the credibility of the programs.
You should also understand that the amount of investment for each program depends on other issues. Such as minimum investment of each program. Some programs have minimum investment of $10, $25, $50, $100, $200. Even there are programs with minimum investment of $1000.
In conclusion, there is no ideal diversification formula that is right for every investor. It depends on each program, your financial situation and tolerance of risk, but if you diversify your portfolio over different programs. Your money will always be safe even under the worst case.
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