Legal advice should be sought on structuring a pooled investment scheme before making any offers to investors. Before investing in such schemes, advice should be sought from a licensed investment adviser. There is also the need to determine whether there are yearly maintenance fees and how long the investment needs to be in place before producing satisfactory returns. For a multitude of reasons, many investment schemes have lost some or all the money invested, or have failed to make a better return than otherwise could be realised from deposits in a bank account. Crops can fail and plants and animals can lose value as more people invest in them.
Some schemes succeed but skill is required to pick the good ones.
Experts themselves can make mistakes. One attraction of such schemes is the opportunity to manage tax obligations more expeditiously. An investor can claim tax deductions for the interest paid on borrowed money if the asset is intended to produce an income. However, if there is no income from the scheme, the Australian Taxation Office can decide the scheme was not really intended as an income-producing asset, thus disallowing the tax deductions. As well, if the tax deductions are taken in the first year, any later income earned is taxable.