Precautions to schemes that offer high rates of interest?

precautions have to be taken by the public  of losing money in schemes that offer  high rates of interest?

Before investing in schemes that promise highrates of return investors must ensure that the entity offering such returns is registered with one of the financial sector regulators and is authorized to accept funds, whether in the form of deposits or otherwise.

-Investors must generally be circumspect if the interest rates or rates of return on investments offered are high.

-Unless the entity accepting funds is able to earn more than what it promises, the entity will not be able to repay the investor as promised.

-For earning higher returns, the entity will have to take higher risks on the investments it makes.

-Higher the risk, the more speculative are its investments on which there can be no assured return.

-As such, the public should forewarn themselves that the likelihood of losing money in schemes that offer high rates of interest are more.