What is the DXPortfolio?

by Matthew Glanfield

If you have been following DXSynergy at all for the past few months you will know that they have implemented a ton of changes. This has caused much confusion for those that had different understandings of how the system worked.

One of the biggest misunderstandings has been with the DXPortfolio. This has prompted me to write this article to explain to you exactly what the DXPortfolio is and how you can make money from it.

The DXPortfolio: A Credit Service?

Recently DXSynergy came out and firmly said that they are not a "get-rich quick scheme" or an HYIP (high-yield investment program). They also said that the DXPortfolio was meant to be a credit service and that DXDebit is meant to be paid back when used.

This confused most DXUsers who had thought that the DXPortfolio was meant to be an investment opportunity of sorts that would make them money in the long run. This is not surprising as that is exactly what DXSynergy said before (this wording can no longer be found on their website, but they had said in the past that the DXPortfolio was an online asset from which one could pull an income).

With the switch in verbiage from DXSynergy many thought that they were no longer supposed to make money from their DXPortfolio if they ran it the way that DXSynergy wanted them to.

Trying to explain exactly what all this means and how you can make money from it would be very difficult here, so instead I will give a rather long example of something that you are probably more familiar with and then tie it into the DXPortfolio in the end.

My long-winded example...

I am pretty sure that most people are familiar with credit cards and how they work, so I will compare the DXPortfolio to a credit card.

Most credit cards can be obtained free of charge. You fill out some forms, the credit card company does a credit check to make sure that you are clean (enough) and then gives you a plastic card with a limit. You are allowed to borrow up to this limit but no more. You must then either pay it off within 30 days or be forced to pay interest.

(Notice I am bolding certain words - there is a reason to that which you will see soon enough.)

However, there are certain credit card companies that will allow you to get a credit card even if your credit history is horrible. They do this by requiring you to give them funds to cover the limit. For example if you want a $1000 limit then you need to give them $1000. You may wonder why anybody would do this - the simple reason is to help build up the person's credit history.

Once the person obtains the credit card with the $1000 limit they use it just like any other credit card, except that if they take too long to make payments the company simply uses the funds that they have been given in the beginning to pay off the balance and then will usually shut down the account due to misuse.

This does two things:

1. It allows the company to insure that they will get paid even though they are dealing with high-risk customers.
2. It allows the customer to get a credit card to start rebuilding their credit history.

Hopefully now you have a better understanding of these "pre-paid" credit cards. If you don't read the past few paragraphs again as it is key to understanding this next section.

Now imagine...

Picture that the same credit card company has a rather interesting policy - the longer you have their credit card the higher your limit will grow, without giving them more funds. The reason they do this is because they take your $1000 and use it to make more money, thus increasing their own capital.

We will say that your credit card limit increases by 10% per month, so the second month you will have a $1100 limit, the month after the limit will be $1210, and so on. You can borrow as little or as much as you want, but you are still required to either pay back the full amount that you borrow or pay interest.

Eventually you could have a credit limit of $10,000, and then later on $20,000, and the amount continues to increase, as long as you pay the fees each month. If you ever miss a payment then there are additional penalties. If you keep missing payments eventually you owe more than your limit. The credit card company would probably eventually shut down your credit card and demand payment, and maybe even send a collection agency after you (and that's when it gets nasty).

A feature that would make it all better...

Let's further this credit card company's strategies. If you are unable to pay the fees or pay back the amount that you withdrew then you are given one other option - to decrease your spending limit. This company allows you to pay off your debt by lowering your credit limit by the same amount.

The company allows this because it basically means that they get to keep more of the gains from the funds you initially invested. A simple example will make this evident:

Say you start off by giving them $1000 and getting a $1000 credit limit. You then go out and buy a $500 TV using this limit. After a month you realize that you will not be able to pay this amount back, so you call your credit card company and tell them to lower your limit by $500. They do so gladly and your limit is now $500.

Did the credit card company lose any money? No! You gave them $1000, they leant you $500, and then you lowered your limit by $500. That leaves them with $500 and your limit at $500, which means nobody has lost out!

Now let's say that instead of buying a TV you wait one month for your limit to be $1100. You then borrow $100 and shortly after call your credit card company and tell them to lower your limit by $100, thus eliminating your debt and bringing your balance back down to $1000.

Once again has the company lost $100? No! That $100 that you borrowed was basically the profits that they received by using the $1000 that you put into the credit card in the beginning.

One last thing...

The last catch is this - there is a monthly fee to use this credit card regardless of whether you use it or not. Luckily this fee is only 3% so it is not larger than the gain that you receive to the limit. If you pay the fee with new funds you basically give the credit card company another $30 (in the first month) so that your limit can increase by $100 (in the first month).

If you are unable to pay the fee then you can borrow the $30 and then either lower your limit by $30 or just wait another month and pay an extra bit of interest so that you can keep the limit where it is. It is completely under your control.

This may seem like a rather complicated credit card (and it is!) but the avid reader will see an easy way to make money from this "credit system" in such a way that the credit card company doesn't mind.

And that brings us to the end of our long-winded example.

How this applies to the DXPortfolios