HYIP vs Banks
Some people would prefer to take the risk with the possibility of losing than waiting for a small percentage of profitability over a long period, and some, on the contrary, would rather entrust their funds to professionals and receive a small but guaranteed income over a long period. Nothing like? This article focuses on HYIPs against banks. About their definitions and differences.
What is a bank?
A bank is a financial and credit organization that performs various types of operations with cash and securities and provides financial services to the government, legal entities and individuals. The bank was established in order to extract profits at the expense of investors. What is not a financial pyramid? And here is what. At the legislative level, the bank is allowed to attract funds from legal entities and individuals for further use, but not to the financial pyramid with the help of a special license.
Bank operation principle
We believe that it is important for every educated person to know how banks earn. We explain quite simply and clearly.
You “borrow” money to the bank when you open a current or savings account. The bank gives you a small interest rate on this account. Suppose 1%.
They give loans to people who buy houses, as well as other loans. They take, say, 7%.
As you can see, the difference between 7% and 1% is huge. Consider minus the costs of maintaining branches and bank cash desks - this is their profit.
We give an example with numbers. If you deposit 100 000 $ in a savings account, you can earn 1 000 $ per year. They lend 100 000 $ under 7% and get 7% - 1% = 6%, that is, 6 000 $ per year from your deposit.
Rather simple language explained how the bank makes money. So, once again, you lend them money that they “invest” by borrowing them and get 100% difference every year until the deposit expires under the contract and you take the money.
What is HYIP?
HYIP (HYIP) - this is not a word, but an abbreviation, which from English stands for High Yield Investment Program - that literally means a highly profitable investment program.
HYIPs in common and at the legislative level are called financial pyramids.
HYIPs position themselves as investment projects that offer everyone who wants to make a deposit in their fund and quickly increase their capital. Let us hurry to warn you that there are no real activities behind the back of such projects and there can not be. They work at the expense of subsequent investors (the principle of the financial pyramid).
Principle of operation
Virtually all financial pyramids are built according to the so-called Ponzi scheme (the famous adventurer of the early 20 century), which the creators are trying to hide from potential contributors in one way or another. The principle is to continuously attract a larger number of investors, at the expense of which interest returns are paid to those who have previously invested in the financial pyramid. In order for profitability to remain at the same level, an increase in the number of participants is necessary.
Such structures are called pyramids for the reason that a small top gets the lion's share of financial injections, including, as a rule, the creator of this financial pyramid and a small group of participants (depending on the level of the financial pyramid). In fact, you can almost compare everything with financial pyramids. For example, the dollar, banks, but behind them is fixed some kind of illusion of stability. It happened historically.
What is better?
We will not be able to give you an unequivocal answer to this question, because everyone should make conclusions for himself. It is logical to assume that we will be more on the HYIP side than the banks, since We have been monitoring the investment projects for more than a year now. Our choice fell on HYIPs for the reason that here you can get more income in a short period of time than in banks for a long period. In banks, you can lose time and earn a small percentage (not taking into account inflation) for a huge period.
The article turned out to be not educational, but expressing its point of view about banks and financial pyramids. We hope that everyone can make the choice himself and the article was useful and interesting for you. By the end I would like to repeat that almost everything is a financial pyramid, the same banks and the dollar currency. Perhaps in the future we will write a separate article on this topic.
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