Investing is one sure way of building your wealth and securing your future. Like most people, it is easy to jump at the opportunity to put your money into a surefire investment that promises huge returns.
Interestingly, such sweet deals are mostly recommended by the people we trust, be it, a friend, family member, colleague or loved one.
Usually, what starts off as a normal conversation ends up with statements like:
- Chale, you for look sharp ooo, we dey chop money lef you.
- This one be lowkey move, invest small then chop big.
- I know somebro wey start plus 5k, rydee he dey chop 10k every month.
However, be careful of any person or institution that tries to sell you on such sweet deals. You could become the victim of a Ponzi scheme. In a typical investment Ponzi scheme, fraudsters promise incredibly high returns, they deliver – for a while and eventually collapse.
The truth is these Ponzi schemes do not invest your money in anything. They only ‘rob Peter to pay Paul’. They use money from new investors to pay their obligations to the old but eventually, they are unable to bring enough fresh money to sustain itself and collapses. They then prey on the emotions of their depositors with excuses like:
- The government does not want us to compete with them, so they shut us down.
- We have invested in gold and will pay you back soon, among others.
In a country like Ghana where Ponzi scheme hits almost every 4 years, it is important to pay attention to the ‘red flags’ before you start your investment journey.
Here is how to protect yourself:
- Be Skeptical
If someone tries to sell you on an investment that has huge and/or immediate returns for little or no risk, it could well involve some sort of fraud. Be extra-cautious if the returns are being generated by something you never heard of or in a way that’s impossible to follow.
- Be Suspicious of Unsolicited Offers
Someone contacting you unexpectedly, perhaps inviting you to an investment seminar, is often a red flag. Investment scams often target elderly people, or those close to or in retirement.
- Check Out the Seller
Research on the institution or investment firm using the Bank of Ghana or the Securities and Exchange Commission’s list of approved registered financial institutions as a checkpoint. Verify that the institution is licensed and look out for any negative information.
- Verify the Investment Is Registered
Ponzi schemes often involve unregistered investments, says the Securities and Exchange Commission (SEC). Start by asking the person offering the investment: If the investment isn’t registered, ask why (not all investments must be registered) and if you’re told it is, feel free to verify.
- Understand the Business Module of the Institution
Never invest with an institution you do not fully understand. There are many online resources to help you learn how to invest and how to evaluate opportunities for risk and potential gain. Do not write a check to – or open an account with – anyone who won’t fully answer your questions or who tries to discourage questions by saying the investment is using secret, proprietary or too-complex-for-laymen strategies.
- Report Wrongdoing
If you think an investment is a Ponzi scheme or any other type of scam, or you have been victimized, file a complaint with the Bank of Ghana or the Securities and Exchange Commission.
The Bottom Line
It’s vital that you know whom you are dealing with and that you understand any investment before handing over your money. Be doubly careful if someone contacts you unsolicited about an investment. If anything seems off to you, report it to the authorities and let them figure it whether it is legitimate or not.
Sure, you may miss out on the opportunity of a lifetime. But probably not. As the adage says, “If it sounds too good to be true, it probably is.”
Check out Dalex SWIFT, a fully digital investment product in Ghana by Dalex Finance. Visit www.dalexswift.com for more.