Compounding....When Should You Do It?

Is compounding a good idea? I am asked this question quite often by many investors. I have heard many people say that it is never a good idea to compound in hyips. I dont completely agree with that statement. I myself have reaped great benefits from compounding in HYIP's. So I cannot deny that it a great way to skyrocket your profits.

Compounding is when you take your daily or weekly earnings and add them back to your principal investment. Heres an example:

Lets say that your initial investment is $1000.00 usd and your daily interest is 1.5%, this means that your daily payout will be $15.00 a day. Now, if your program has a compound feature on it (some do and some dont), then you can set this account up where a portion or even all of the earnings will go back to the principle balance.

So if you are earning $15.00 dollars a day and you set your compounding to 100%, then your progression will look something like this:

day 1: $1000.00
day 2: $1015.00
day 3: $1030.22
day 4: $ 1045.67
day 5: $ 1061.36

day 30: $1539.98
day 60: $2407.11
day 90: $3762.51

If you end your compounding at this point to take daily payments, you are now making $56.43 a day, versus $15.00 a day. Big difference.

So as you can see instead of doing the $15.00 day after day, you can really blossom your account by being patient and taking the extra risk of compounding. Of course there are some drawbacks in doing so. As I mentioned, it is very risky to compound in HYIP's, because the longer you stay in a program, the higher risk you are taking in getting your money back.

Lots of people have suggested that you first get your principle out and then start your compounding. This way, your seed money will be safe and you can risk the rest of the profit at no personal loss to you. I highly recommend this technique for beginners who do not really know the pattern of HYIP's

Also, you can try another, more advanced technique that has worked really good for me. Sometimes when I run across a program that has gained much popularity in its early stages, I will compound for the first month or two and cash out for the remainder of the cycle. Its kind of like doing it opposite of the first plan, but it works. This technique is displayed in my example above where the $1000 investment started as a $15.00/day payout and grew to a $56.43/day payout in 3 short months. Not bad

I would never recommend compounding for the whole investment cycle as this is extremely risky and could result in a massive headache if the program collapses before you get a chance to cash out. One more thing to consider, if the programs cash flow is restricted, and you request a large amount at the maturity of your investment, you just may not get it.

In summary, I believe that compounding is a risk that should be weighed with all other risks. In other words. I will say go for it if you have taken other measures to minimize your risk. You may be in total profit and have nothing to lose by compounding. Everyones situation is different. Above all things, always have fun at what you are doing.

Take care
Victor