Investment SCAMs: What You Need To Know

“Earn 10% Returns monthly”, “Invest N50,000, earn N100,000 in 10 days”, if it seems too good to be true, it probably is – and is highly likely to be a scam. Always be wary of any investment opportunities that promise a high return with little or no risk. 

Before we go further, let’s not confuse high-risk investments with scams. When a company trades in stocks or Forex and explicitly informs you of the risk of losing your money, and you choose to still go ahead, that is categorized as a high-risk investment. On the other hand, if you are not informed of the risk and you are being “guaranteed” your payout, it’s categorized as a possible scam. 

Investment scams are usually targeted at people with very little knowledge about finance. Just like the above examples, they usually involve promises of big payouts, quick money, or guaranteed returns. This is why you need to improve your financial literacy, you would be able to easily identify when an investment offering is likely to be a scam or is simply not sustainable.

Another set of people who are easy prey for investment scams are low/medium income earners who are very eager to grow their income. Some people might call it greed but it still boils down to naivety. Most people don’t know that wealth creation takes time, and that investments are not supposed to be get-rich-quick schemes.

It is important to note that not all investment opportunities start out as scams. Many of them had plans to pay the investors back. Unfortunately, the business venture didn’t work out as planned, probably due to a poorly-done market survey or underestimated risk assessment which led to an over-projection of the profit.

It’s advisable to always do your due diligence before investing. If the company says they are investing in real estate, find out the profit margins that are obtainable in that sector and compare them to what you are being offered. Don’t forget to put the time frame into consideration. 20% ROI in one year is different from 20% ROI in one month. One is feasible, the other is not.

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