You know the old adage well – if it seems too good to be true, it probably is… And never is this more applicable than in the world of investments. If you’re offered an unbelievable opportunity to invest your hard-earned cash with guaranteed mega-returns, your should consider this really carefully and probably run for the hills!

Does this mean you should just give up on finding investment-instruments that offer high returns and instead simply settle for safe, low-risk investing?  Absolutely not! To the contrary, all it really means is that you need to educate yourself enough to know what you’re taking on, the level of risk, the credibility of receiving a high return and the time period required to see real investment growth.

Remember: “Formal education will make you a living; self-education will make you a fortune” – Jim Rohn

What exactly are high return investments?

High return investments offer greater returns than the average investment. And how much is that? Well, you will find that longer term, lower-risk investments will give you anything between eight and twelve percent per annum (with a general investment product offering around ten percent).  Any product offering higher returns can be classified as high return investments. When investments start offering returns up to 30 percent and higher, you know you have really uncovered the mother of all high return investments.

Better watch out though:, often Ponzi schemes (also known as pyramid schemes or high yield investment programmes) promise really high returns and turn out to be a fraudulent investment operation.

.  That’s why it’s always wise to do a lot of research about the investment itself and be particularly weary if such high returns are “guaranteed”.

Examples of legitimate high return investments

Now that we’ve warned you regarding what to look out for, here are a couple of legit high return investment options:

  • Real Estate Investment Funds – often owned by an organisation called a Real Estate Investment Trust (REIT), these funds offer investors exposure to property investment and mortgages. In turn, they use their portfolio of properties’ lease income to pay dividends to investors.

We rate that the income associated with a REIT is normally quite stable due to the long-term nature of most leasing contracts.

We hate that socio-political factors can drive down the cost of leasing, which can result in a decrease in dividends.

  • Preference shares – referring to a company’s stock that are of the highest priority or preference. A preference share is a form of stock that comes with additional benefits. Taking precedence over a company’s ‘normal’ stock, this investement instrument provides specific dividends or pay outs before the ‘normal’ stock dividends are paid.

We rate that when you own preference shares (also called preferred stocks), you have a greater claim to the company’s assets and the dividends are typically guaranteed.

We hate that unlike ‘normal’ stock, preference shares have less potential of appreciating in value.

There are many other options if you are in the market for higher return yielding investments but before you entrust your valuable money in someone’s hands, make sure that you understand what the pros and cons (as well as the terms and conditions) of the investment are.