About five years ago, before I entered the financial services industry, I was searching online for investment opportunities. I had a full-time job and wanted to earn additional income without starting a business that would require my daily attention. I was also trying to educate myself about money because I did not have many people around me who could guide me through financial decisions.
Then I came across an organisation that claimed to trade in domain names.
The opportunity sounded convincing. The company had a website, representatives who explained the process, and a domain name they said could generate attractive returns when sold. I was told that an investment of about ₦600,000 could potentially yield around $10,000 within a few weeks.
I did not have the full amount. When I was offered the option of participating with a smaller sum, I borrowed ₦100,000 from a friend to make up the money I needed.
I was asked to record a video confirming my payment. I received reports about the domain name’s progress, and representatives contacted me regularly. They even provided an office address. Everything appeared organised enough that I did not feel the need to visit the office.
Months passed, but the promised outcome did not materialise. Eventually, I visited the address and discovered that the operation was not what I had believed it to be. I also encountered another person who said he had been waiting years for his investment to be resolved.
That was when I realised I had lost my money.
The appearance of legitimacy
Looking back, I understand why the opportunity appealed to me. I was employed, wanted to improve my finances and was actively seeking knowledge. The returns sounded attractive, and the people behind the opportunity appeared to know what they were doing.
But I had not established the most important thing: whether the investment was genuine and whether the promised returns had a credible basis.
I had seen a website, received reports and spoken to representatives. What I had not done was independently establish who was operating the business, whether the domain name existed and was available for sale under the terms described, how ownership would be transferred, or what evidence supported the expected returns.
A professional website is easy to mistake for proof of credibility. Regular phone calls can create familiarity. Reports can look convincing without proving that an asset exists, belongs to the operator or can be sold at the stated price.
These details may make an opportunity appear legitimate, but appearance and evidence are not the same thing.
Follow the money, not just the promise
When someone presents an investment opportunity, one of the most important questions to ask is: Where will the returns actually come from?
In a genuine investment, there should be an understandable explanation of the underlying asset or economic activity that may generate returns. If the proposal involves buying a domain name, for example, the investor should understand which domain is being acquired, who owns it, how ownership will be transferred, what evidence supports its valuation, whether there is a credible market for it, and how a sale would generate the expected proceeds.
An explanation that sounds sophisticated is not enough. The details must be independently verifiable.
The same principle applies to other opportunities. If someone promises a fixed return within a short period, ask what generates the income to pay it. If the answer is vague, changes when questioned or depends mainly on recruiting more participants, proceed with extreme caution.
A Ponzi scheme may use money from newer participants to pay earlier participants, creating the appearance of profitable investment activity when the payments are not supported by sustainable investment earnings. Not every unsuccessful investment is a scam, and not every attractive return is fraudulent. However, investors should understand the proposed transaction, assess its risks and verify the people and assets involved before committing money.
Five questions to ask before investing
First, what exactly am I investing in? Identify the asset, business or activity behind the opportunity. If you cannot explain it in simple language, you may not understand it well enough to invest.
Second, where will the returns come from? Ask what generates the income or increase in value, and request evidence that can be independently checked.
Third, who is behind the opportunity? Verify the identity of the operator, relevant registrations or authorisations where required, and claims about its track record. Do not rely solely on documents supplied by the person soliciting your money. Registration alone does not guarantee that an investment is safe or profitable.
Fourth, what could go wrong? Understand the possibility of losing your capital, delays, fees and restrictions on withdrawing your money. Ask what happens if the expected buyer never appears or the business fails to deliver.
Finally, can I afford the loss? Do not borrow money or commit funds meant for essential expenses simply because an opportunity appears too attractive to miss. Pressure to act quickly is a reason to slow down, not abandon your checks.
Financial knowledge must come before financial opportunity
My experience taught me that wanting to build wealth is not enough. You must also develop the knowledge to assess the opportunities competing for your money.
Today, when people approach me with investment proposals promising substantial returns within a short period, I want to understand the structure before considering the reward. I do not need to dismiss every opportunity, but I must be able to ask informed questions and independently verify the answers.
We often focus on teaching people how to earn more money. We should pay equal attention to teaching them how to evaluate opportunities, recognise warning signs and protect what they have worked hard to earn.
You do not have to become a financial expert before you start investing. But you should never feel pressured to invest in something you do not understand.
Before asking how much an investment could make you, ask how it intends to make that money.
That question could save you more than an attractive opportunity could ever promise to earn you.
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