About 13 years ago, a friend excitedly told me about an Investment opportunity that would triple my money within a few weeks. He said he had seen some people who invested their funds in that scheme and had collected about 4 times of what they put there and that he was going to put in some funds as well. Crazy…… 4 times return within a few weeks, bring it on!

I spoke to a senior friend living overseas and between us, we put in about N1,000,000 . I remember vividly paying the money into a bank and going to their “office” to submit a copy of the teller.  No fact finding,  No due diligence, nothing;  I was just excited about the almost N3,000,000 we would be collecting when the investment “matured” a few weeks after!

Need I tell you the outcome of this juicy investment? My friend collected his own returns, but I never did.  How could a Chartered Accountant like me ( who supposedly should know better) get into such a scheme? Talk about the enticing effect of Ponzi schemes.  A lot more of such have come and collapsed with people’s hard earned monies.

But who do we blame for this? The brains behind the schemes, the government who doesn’t clamp down on such, the people who invest their funds in such or the society that doesn’t provide sound financial  literacy opportunities for people on how to manage their funds and what not to invest in?

Ponzi schemes have existed from way back and the do exist even in developed countries!

Every individual has the responsibility of managing their funds and safeguarding their resources from the hands of scrupulous and fraudulent schemes operators. You owe yourself the responsibility of  becoming financially literate, working with finance professional on areas you are not sure of and choosing not to be greedy !

“Wealth from get–rich–quick schemes quickly disappears; wealth from hard work grows over time”
Proverbs 13:11(NLT).

In recent times, one of the longest standing “investment” schemes crashed. I have heard people ask me time and again ” what do you think of this particular investment platform” .  All the signs were there; I knew it was too juicy to be true and sustainable. Had the features of ponzi, only that it looked a bit more structured.

My simple answer to questions on such investment schemes has always been this quote by Warren Buffet:

“Investment must be rational; if you can’t understand it, don’t do it”

What does a scheme that promises 1.5% daily return or  200 % returns in 6 months ( or probably some more wow-zifying returns) do with the funds? Can real estate business be that profitable in the United Kingdom? If then, all the rich people in the world should go take up properties there and keep getting wealthier.

Members do a lot of intra-transfers within themselves to either invest or divest, ; how does that sound? It was imminent this scheme was going to crash.

Investment is a long term venture, it’s one of life’s vehicles to make your money work for you, but we should realize there are principles of investing that we must be ready to adhere to in order to maximize our investment opportunities.

Next time someone runs to you about an investment offer, please let it pass this test of 6 things listed below:

1. Verify the credentials of the scheme and the authenticity
2. Be skeptical of investment pitches that guarantee a certain return or promise spectacular profits.
3. Ignore the “everyone is doing it” story
4. Refuse to be pressurized
5. Never feel obligated; especially when it,s coming  from a respected person
6. Learn to spot the red flags of investment fraud so you can protect yourself; be informed.  Ask professional even if it feels genuine.

Sola Adesakin is an experienced and versatile Chartered Accountant with about 16 years hands-on experience on Personal and SME finance. She is a Personal Finance Coach, Author of 5 books and a Conference/Seminar Speaker.