HISTORY OF HYIPS

The concept of High Yield Investments began when capitalism was in its ‘infancy’ state. It was a great way to pool in capital, and invest in an idea that would prove to be either a success or a failure. In the early 1900s, when someone required some capital to start a business idea, they would first approach family members. Hoping that in return, when their business idea does prosper, they would have a share in the wealth. One of the very first records of such practice was Warren Buffet. When he had the idea to start investing he established a partnership in 1956. He then proceeded to pool together $105,000 from seven limited partners consisting of Buffett's family and friends. Later he set out additional partnerships which were later consolidated as Buffett Partnership Limited. Between 1956 and 1969 his investments made in excess of 30% compounded annually, when the market then was about 7% to 11%. He achieved this by following the strict investing principles thought by his mentor Benjamin Graham. Now another person also made a name for himself, while not as brilliant as Warren Buffett, in a much more notorious sense. His name is Charles Ponzi. Charles Ponzi had the idea of buying US stamps cheap from outside the country and selling it locally at market price. His greed for money enticed him to pool in money from family and friends to venture further into buying larger amounts. When word got out of his so called ‘investment’ a lot of people started to jump at the idea. Ponzi proposed to give a high return after 3 months should they choose to invest in his ‘business’. To cut the story short, when his business could not generate the rate of return to the amount of investment coming into his business, and could not keeping up with his commitment to his older investors, he used the money generated from new investors receipts to pay off his older investors. And when there was not more new investors, and the money ran dry, his business began to collapse. You can actually read the history of Charles Ponzi and how the word Ponzi scheme came about. (http://home.nycap.rr.com/useless/ponzi/)When the internet came into being, HYIP too began to build its name. While there is no clear record as to when the word HYIP or High Yield Investment Program was first coined, it is believed to have started sometime early in the year 2000. Records show that a popular HYIP forum was started in 2002 thus the name HYIP might have caught up its popularity thereafter.