Who profits from an HYIP?

In an HYIP the owner at some point snatches all the active funds and makes a fortune while all others get burned. Easy as that. Right? Well not exactly ...

To understand why most of the profit does not go to the person(s) behind an HYIP, we have to visualizse the system. HYIPs are often also referred to as "Pyramid Schemes" - for a good reason.

We assume you've already understood the concept of
Doubling Cycles
at this time. *With each doubling cycle a new layer of stones is added to the bottom of the pyramid and interest for all layers above are paid with the incoming fresh money. So how many "stones" (aka investors) are in the bottom layer?
As you see the relative proportion of investors in the last layer compared to all "old" investors gets smaller and smaller with every doubling cycle. Which also means that much more money is cumulatively paid to existing investors than is available for the owner to run off with.

So where does all the profit end up then? With the early investors at the top of the pyramid - that were smart enough to cash out in time This is the important part: Investing early does not guarantee success, as long as you do not cash out at the right moment

Oh, and by the way: The owner of a HYIP might run off with some money at the end. But he can never spend it easily without having to be worried about getting caught. You as an investor on the other hand have nothing to fear at all from the legal side ...
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