Very benign things are often breeding grounds for more noxious things. Standing water is a breeding ground for mosquitoes, children are a breeding ground for germs and low interest rates are a breeding ground for dubious investments and outright scams.

Investors who’ve been well served by their “risk free” (except for inflation, tax and no growth) income streams from cash have been pummelled in recent years. Investors watching their income stream slowly dwindling have been vocal in the media with their frustration and it’s no stretch to believe people with less than appealing projects are rubbing their hands together thinking about this potential funding or revenue stream.

Investors who’ve clung to cash over the years have often done so out of a lack of financial education. They may regard the share market as a casino, something often reinforced by media coverage that loudly focuses on the extremities. The concept of layering in equities, fixed interest, listed real estate and cash to arrive at a portfolio suited to their needs will be lost on them.

Some will quietly adjust their spending habits down, another group will spend the same and eat into their principle, while others will be lured into the wrong investment because it appeared before them at the right time.

In the past we’ve seen mortgage debenture funds go belly up, predictive share trading software that was really just tracking what specific shares had done and off the plan property spruikers who’d load their commission onto the sales price, meaning the investor started about 10% down on closing.

We found a new doozy in an inflight magazine recently. It offered the “opportunity” to “see your money grow rapidly” with 15-25% annual returns. Upon visiting their website you’d find the deal was to drop a minimum of $20,000 into property restoration. The promise was 15% returns in the first year, 20% in the second and 25% in the third, along with 100% return of capital at the end.

From what we could tell, it was a real estate renovate and flip scheme, so how they could promise any returns, let alone the return of 100% of an investors capital, is beyond us, but in the fine print we found the following disclaimer does not guarantee or warrant, in any way, that any information it provides is complete, true, accurate or non-misleading.” There was also no Australian financial services license (AFSL) to be seen anywhere.

Unless your financial adviser’s name is Charles Ponzi or Bernie Madoff, there is probably no bigger red flag out there than a company without an AFSL promising specific rates of return.

If you know of anyone hurting from low interest rates and now considering something like this, please ensure they’re warned away.

This represents general information only. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your personal investment objectives, financial situation and individual needs.

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