Warning Signs an Investment’s Too Good to Be True
If someone offers you guaranteed fabulous returns with absolutely no risk, that's a dead giveaway. However, other shady signs are tougher to spot.


Over the last few years, the broad markets have generally been on an upswing, which is great news for those planning for their retirements, business investments, education funding, philanthropic aims, charitable contributions and estate transfers. A major goal of investing is to build wealth, and many investments are based on knowledge and trust, so their merit and viability may not be questioned until they turn. But by then, it may be too late.
As you read news stories about once-respected companies engaging in dubious business practices, you should carefully review your own accounts for these warning signs:
1. Claims of high investment returns with little or no risk.
Every investment carries some degree of risk, and investments yielding higher returns typically involve more risk. Be extremely suspicious of any “guaranteed” investment opportunity, and look at the worst returns along with the best and the averages.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
2. Overly consistent returns.
Investment returns tend to go up and down over time, especially instruments seeking to always beat the market. Be wary of an investment that continues to generate regular, positive returns regardless of overall market conditions. If you are invested in a higher-yielding instrument, especially one that has a foreign domicile, then also be aware of the tax and filing consequences that may apply.
3. Secretive and/or complex strategies.
Avoid investments that you don’t understand or for which you can’t get complete information. Review the risks and fees involved.
4. Issues with paperwork.
Ignore excuses regarding why you can’t review information about an investment in writing, and always read an investment’s prospectus or disclosure statement carefully before you invest. Account statement errors may be a sign that funds aren’t being invested as promised. Also, you may be a victim of what was previously unthinkable: an unscrupulous business practice in which accounts are opened in your name without your authorization.
5. Difficulty receiving payments.
Be suspicious if you don’t receive a payment or have difficulty cashing out your investment, especially if you have been told differently. Keep in mind that Ponzi scheme promoters sometimes encourage participants to “roll over” promised payments by offering even higher investment returns.
If you begin to worry that your investments are showing signs of suspicion or even fraud, then it is imperative that you bring your concerns to a professional who can help you determine the proper steps, which may involve higher authorities. If you feel that an unscrupulous broker or financial planner has misled you, then you may have to contact that person’s branch or complex manager to lodge a formal, written complaint. You may have to take claims to binding arbitration.
If there is evidence of fraud, especially among multiple investors, then you could collectively contact the U.S. Attorney’s Office and/or the state securities regulator where you live or where the suspected crime originates.
Any suspicion of financial crime or commodities, investment, securities, mail or telemarketing fraud should be reported to one of more of the following:
- The Federal Bureau of Investigation (FBI) at 202-324-3000 or online at https://tips.fbi.gov
- The Securities and Exchange Commission (SEC) at 800-732-0330 or online at www.sec.gov/complaint.shtml, and/or
- The Commodity Futures Trading Commission (CFTC) at 866-366-2382 or online at www.cftc.gov/TipOrComplaint.
- The Federal Trade Commission (FTC) at 877-382-4357 or online at https://www.ftccomplaintassistant.gov/information?OrgCode=#crnt
- The Department of Justice (DOJ). This website can help you locate your U.S. Attorney: https://www.justice.gov/usao/find-your-united-states-attorney
The government takes financial crimes very seriously but can only act when alerted.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Justin J. Kumar embraces a proactive, systematic investment management approach with a customized, proprietary system to help guide his clients toward their financial goals.
-
$425 Million Google Class Action Lawsuit: Do You Qualify for a Payout?
Google was found liable for violating the privacy of 98 million users in a class action lawsuit. Are you one of them?
-
Kiplinger News Quiz, September 5, 2025
Quiz 401(k)s, Google's Alphabet and tariffs on luxury goods all made Kiplinger headlines this week — but why? Test your knowledge of this week's financial news.
-
Greed, Fear and Market Volatility: A Financial Adviser's Guide to Keeping Emotions Out of Investment Decisions
Don't panic! And don't be so confident in the stock market that you overlook risk. Instead, be logical. Your retirement security could depend on it.
-
Want a Financial Adviser Who Shares Your Faith? Look for One With a CKA Designation
Financial professionals with a Certified Kingdom Advisor certification are committed to integrating biblical principles with sound financial advice.
-
10 Ways to Stay Safe From Grandparent Scams and Other Fraud, Courtesy of a Financial Planner
Scams are increasingly hard to detect, and anyone can be fooled, from older people to educated professionals. Here are 10 ways to avoid becoming a victim.
-
This Is How the Student Loan Bubble Is Primed to Pop, From a Student Funding Expert
Fueled by easy money, inflated tuition and high default rates, the student loan bubble mirrors the 2008 subprime mortgage crisis. We could be headed for a potential financial collapse. What can we do?
-
More Than Money: The Hidden Toll of Financial Abuse of Older Adults
Financial abuse from schemes involving tech support, government impostors, false sweepstakes, grandchild hoaxes and online shopping issues can cause thousands of dollars in losses.
-
I'm a Financial Planner: Here Are Three High-Impact Ways to Make a Difference With Your Dollars
The world often feels out of control, but here are three ways to use your money — through investments, charitable giving and political donations — to help create a more just and sustainable future.
-
The Unsung Hero of Aisle 5: A Tale of Forgotten Change and Compassion at the Supermarket
This supermarket manager went above and beyond to help when a child forgot her change at the checkout counter. You might be surprised at some of the complications that supermarkets face when it comes to customers' forgotten change.
-
Train, Integrate, Retain: A Strategic Playbook for Adviser Onboardings
Build a thriving practice by training new advisers with clear goals, structured processes and consistent mentorship for strong team growth.