One of the basic rules of investing is that the higher the risk, the more potential for gain. A high yield investment program (or HYIP) is one such program. By investing a small amount, a HYIP offers the possibility of high gain, with some risk.
One of the biggest problems with HYIPs is that they can represent a lot of money placed at risk for a high potential gain. Although they can involve small amounts of money, most investors will invest as much as they figure that they can risk, in order to take advantage of the high potential return. Read: Although they dont require the huge start-up that other investments do, people do spend as much as they can afford. (Some put in more than they can afford, but this is never recommended.)
Also, some HYIPs are just well disguised ponzi schemes, and are thus highly illegal. (Investigate any investment opportunity, with special care as to the background of the group or person presenting it. Normally, too good to be true would be good advice, but that doesnt always prove true when it comes to investing.) Some HYIPs are in fact defined as ponzi games in order to skirt legislation that prohibits ponzi schemes as well as...