How to Verify Investment Opportunities

Invest your money!

Invest your money!

You've probably heard that phrase more times than you can count. You might also have seen about a hundred flyers advertising investment schemes and been invited to a dozen telegram group chats. 

The pressure, right? Taking part in investment opportunities is a great choice but then there are investments and there are ‘investment-lookalikes’ (scams) and it’s easy to get sucked into all of it when you can’t tell the difference. So in this article, we are going to delve into how you can verify investment opportunities that are legit. None of that Ponzi Scheme drama.

So let’s get into it.

Investment opportunities are basically cases where you have the option to buy something that could increase in value over time. When you put money on an investment option, what you are doing is taking a part of your income to purchase something that you think -- based on reliable knowledge -- will increase in value and in return make you more money. When you think about the prospect of sleeping and your money growing, investments sound pretty exciting and the additional earnings you make from an investment is what we refer to as passive income. 

There are several investment opportunities around today. These days, people can invest in stocks, bonds, agriculture and real estate majorly through crowdfunding platforms, the establishment of new business and, of course, cryptocurrencies. With these many investment options available and more get-rich-quick schemes on the rise, it is important to be able to identify what is real and what is not. The last thing you want is your hard-earned money carted off by a scammer you thought you could trust.

Basically, investment scams are schemes that try to get you to put your money into a venture with promises of getting ridiculously high returns. There are various types of investment scams but regardless of the form it takes, there are usually telling signs that an investment opportunity could very well be a scam. However, one needs to be very attentive to details because these schemes are often carefully designed to look like a real investment opportunity which an unsuspecting person could easily fall for.

Common types of investment scams

Here are some of the common investment scams that you may have come across and should always watch out for:

The first rule of investing is that if you do not understand the investment then you shouldn’t put money into it. When you come across a new investment opportunity, the first question that pops in your head is; how do I get my money back as well as the interest on it? This information should be readily and publicly available to you and most importantly, you must be able to understand how it works and how the money is made before you decide to take a chance with the investment opportunity. If you’ve read it over and over, maybe asked a friend to do some explaining and even talked to someone at the company and still can’t wrap your head around it, then yes, it’s probably a bad idea

Invest 5,000 and make 50,000 in 7 days!

Dear friend, you don’t need a soothsayer to tell you what’s going to happen if you decide to put your last 2,000 in this kind of investment option. It has the word suspicious written all over it. Let’s go over it together: NGN 5,000 yielding NGN 50,000 in 7 days is equivalent to a 900% interest. If you invested in crypto or even real estate, you wouldn’t be getting that kind of interest rate even in 12 months, much less 7 days. Be honest with yourself and do your due diligence whenever you are presented with a new investment opportunity. Sure, it is easy to get carried away but remember, if it sounds too good to be true then it probably is.

If an investment opportunity mandates that you have to refer a couple of your friends to get in on it, then it is more likely than not, a Pyramid scheme. These kinds of investment scams are very popular. They typically require you to make some form of monetary commitment and then follow up by asking you to invite several others from whom you will be asked to take some form of cash payment. These kinds of investment schemes are a typical example of what is called a pyramid scheme which is a “sketchy and unsustainable business model, where a few top-level members recruit newer members, who pay upfront costs up the chain, to those who enrolled them.” As new members also recruit their other members, part of the fees being paid keep going to the top of the pyramid and at the end of the day those who are at the bottom of the pyramid lose all their money. If an investment opportunity looks like it solely relies on referrals to run, then it is probably not making any returns and is using money from all the referrals to pay investors.

For instance, while Yellow Card offers you a referral bonus for inviting your friends and family, you do not have to and nothing would happen to your crypto holding. The referral bonus is just an incentive from us and a way for you to make a passive income.

Companies or the institutions handling these investment options have a duty to disclose the possibility of losses to investors. So if an investment option is guaranteeing that they are 100% sure that returns will be made, then something isn’t quite right and you should consider taking a pass on it.

There are legit investment opportunities worth checking out. It is, however, important to never be in haste when you're ready to invest. Carry out proper research and understand whatever offer you are getting before putting your money into it.