All investments involve some level of risk, however those who are unfamiliar with investing often get roped into risky investments in which they end up losing money. Investments can be tricky, especially if you are new at investing.

Luckily if you learn how to spot a risky investment from the get-go, you have a greater chance of finding the best ways to invest money. Here are a few ways to know if an investment is worth your money or not.

1. What Is the Promised Return?

The first clue that an investment is too good to be true is an extremely high rate of return. An average return on investment for a security such as a stock or mutual fund is 8 percent. Therefore, if you are promised returns of 30 percent or more, it could be a sign that the investment is a bogus one. When looking into an investment that promises a high return, you really want to look into the logic and claims behind these promises. Most likely, the logic is flawed, and you won’t ever get that high of a returned. Just make sure you ask questions when it comes to returns that are promised.

2. How Much Are You Being Asked to Give?

Anyone who asks you to cash out your life savings or take a second mortgage on your home is likely trying to defraud you. An investor should never be pressured to contribute more than they can afford to. If you’re just starting out with investments, start small. This will allow you to get the hang of things, and then you can start investing more once you have figured out what makes an investment promising, and what makes it fishy. No matter how good it sounds, there are some amounts of money that are just too risky to invest.

3. How Often Does the Investment Pay Out?

Will you see a check once a month, once a year, or as one lump sum? Figure out how often you will see your money before deciding to invest. The more access that you have to your money, the better the chances are that you are making a good investment. This is another time that it’s important to ask questions. If you can get a set schedule of when you’ll be paid, that makes the investment more legitimate. If they can’t tell you when you’ll be paid, that’s probably not a good sign.

4. Who Manages the Investment?

The person who manages your money is the most important person in the entire transaction. If you find out that the fund manager has been convicted of or accused of crimes in the past, do not give that person your money. Try to get to know the investment manager as well as you can before investing. Some people think that investing with their friends is always safe, but this isn’t necessarily true. Don’t be shy about asking the investment manager about their experience, past work, and skills in order to get a better idea of whether or not you want them handling your money. If you do come across someone who is trying to get you to invest but they have been convicted of financial crimes in the past, you should report that person to the Attorney General in your state or the Securities and Exchange Commission (SEC) as soon as possible.

5. How Do You Know That You Are Going to Get Your Money?

Make sure that you get a promissory note from the person or group that you give your money to. While a promissory note doesn’t guarantee that you will see your money, it gives you legal standing to go to court if you are the victim of a scam or the contract is otherwise breached. Unfortunately, in today’s world, you can’t take people’s word for it when they say they will get you your deserved money. Having a promissory note will give you a much greater chance of getting your money in the event that the investment manager tries to withhold it from you.

There are several warning signs that you could be giving your money to a scam artist, which is why it is important to be observant and to ask a lot of questions. Make sure that you know the background of the person asking for your money, sign a promissory note and steer clear of any investment that promises you gains that you know are too good to be true. By doing your research and asking questions about the investment, you will be able to judge the validity of the investment. While scammers are clever and often seem sincere, if you know enough about investments, you can avoid losing your money to a risky investment if you know what to look for.