5 questions to ask before investing your money

With the prices of goods and services rising steadily across Nigeria, the value of people’s hard-earned money continues to fall.

Many Nigerians are looking for good ways to grow their money instead of leaving it in low-interest accounts, but it is important to understand where your money will be invested before committing it.

Understandably, the pressure to keep up with rising prices and achieve financial security can make people make rushed decisions. When people see friends, colleagues, or acquaintances claiming to have doubled their money in just a few weeks, the fear of missing out can make them ignore good judgment.

Social media feeds are often filled with schemes promising very high or “guaranteed” monthly returns, including unregulated real estate investments, agricultural crowdfunding platforms, and questionable foreign exchange and cryptocurrency trading pools.

These ventures are often promoted with attractive videos, rented luxury cars, and screenshots of bank alerts meant to make quick wealth and legitimacy look real. Popular celebrities and social media influencers are also often used to make these risky operations appear trustworthy.

However, a professional-looking website, an impressive office address, or a well-known brand ambassador does not guarantee that an investment is safe or properly regulated.

Thousands of Nigerians have lost their lifetime savings after putting their money into schemes whose actual business models were not clear.

An investment expert, Eniola Teru, said, “True wealth accumulation is never built on overnight miracles or unexplained windfalls. Capital growth is fundamentally anchored on measurable productivity, economic cycles, and calculated risk management.”

She added that people who want to invest must resist the temptation of quick riches and make sure they understand how the business works before giving out their money.

“No matter how polished the presentation looks, you must ask hard questions. If a promoter cannot explain their balance sheet in terms a secondary school student can grasp, your capital has no business being there,” Teru said.

This is why regulatory bodies such as the Securities and Exchange Commission continue to stress that building real wealth requires patience, verification, and careful investigation.

Before parting with your money, here are five questions to ask:

Is the company licensed?

Unregistered operators may hide behind basic Corporate Affairs Commission certificates of incorporation, which only show that a business has been registered but do not give it the legal authority to manage investment portfolios or collect investment funds.

“In Nigeria, we have a financial regulatory body; every country has one. We call it SEC. They are responsible for registering and licensing all investment platforms. Before investing, confirm if an investment platform is registered and licensed on their website,” Teru warned.

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How does it make money?

Legitimate businesses make money through real business activities such as selling consumer goods, providing specialised services, collecting rent from properties, or earning interest from loans.

When a company promises high, fixed returns without clearly explaining where the money comes from, it may be using money from new investors to pay existing investors.

“If the yield sounds detached from the real economy, you are likely looking at a Ponzi framework,” Teru explained. “Investors must demand audited financial statements and verifiable operational assets rather than relying on fabricated payout screenshots and influencer testimonials.”

How much could you lose or gain?

Every genuine investment comes with some level of market risk, and protecting your money should always come before focusing on how much profit you could make.

Offers that promise returns with no risk while paying several times more than Nigerian Federal Government Treasury Bills or government bonds do not match normal financial realities.

“High returns naturally carry high systemic risks, and anyone promising absolute capital guarantees alongside massive yields is simply withholding the truth. Investors must establish what safeguards exist, what collateral backs the venture, and how much principal they can realistically recover if market conditions deteriorate,” Teru noted.

What fees will you pay?

Hidden charges, administrative costs, and unexpected deductions can greatly reduce the actual money you earn from an investment over time.

“Transparency regarding cost structures is a key test of professional integrity,” Teru pointed out. “Investors should insist on an itemised breakdown of all applicable charges, statutory taxes, and exit penalties before executing any transfer, ensuring they calculate net gains rather than gross figures.”

Can you withdraw your money?

Liquidity means how quickly an investment can be turned back into cash without losing a large part of its value. Investors are advised to ask questions and check the answers carefully before investing.

An experienced investor, Adeyemi Sunday, advised, “Always verify the ease of exit and secondary market availability before locking down funds. Ask if your redemption request takes two days or six months, what conditions govern emergency withdrawals, and if a secondary buyer actually exists when you need to liquidate.”