The NIRMALA Chellarams League of Young Professionals and Entrepreneurs is…
Investment is a great way to get rich and it’s quite simple to do, you just put in ₦1, wait a few months, and you take out ₦2 or ₦3 or even ₦4. Right?
I honestly wish it’s that simple, but it’s not.
Chances are that you have probably considered investing part of your money in the past, can you remember what went wrong or why you didn’t proceed with it?
You were scared? Or unsure about something? Or scared that you might need the money the next morning and don’t want to be cash strapped.
If you considered yes to any of the thoughts above, you are not alone. From our interaction with customers, we get tons of questions daily bordering around these issues.
And yes, they are right, there are certain things you need to know before you lock in your money somewhere.
The fear of investing wrongly has discouraged a lot of people from investing, but all that is about to change for you.
Take a sit, and grab some coffee because we are about to discuss 5 common investment mistakes you should avoid while investing in Nigeria:
Seeking quick means to get rich
Any investment opportunity that presents itself as a means to get you rich overnight, is a potential red flag and you should avoid it as much as you can.
The financial institutions that manage investment portfolios for investors, also invest the monies by giving loans to their customers and receiving interest on it.
So when you go out clearly looking for where to double your money, then you are personally inviting fraudsters into your living room.
The first mindset you need to eliminate while researching legitimate investment managers is the mindset of getting rich quick.
Not having a financial plan
Many people have good reasons why they want to invest. For some it could be as trivial as seeing their neighbor buy a new car from an investment they made in the past, or it could be that they genuinely want to invest because they know the rainy day is coming sometime in the future.
These are genuine reasons, and should definitely motivate you to invest.
But having a good reason is not enough reason to just dabble in investment and lock your funds without carefully having a plan and understanding how that plan syncs with your day to day life.
You need to define how your financial goal correlates with your current reality, make a plan on how to reach your goal, and stick with it.
A financial plan helps you know exactly what you want from an investment. It also tells you how much you need at hand to run your daily activities, so that you don’t become cash trapped and hence tend to liquidate your investment.
A financial plan keeps you in check so that you will know at any given time whether you are reaching your goal or not.
Investing with unregistered/unlicensed companies
There are tons of organizations out there that claim to provide investment portfolios to investors. There are genuine ones, but there are also a lot of fake (unregistered ones).
When researching investment houses, make sure to do your due diligence to understand for sure whether the organization is registered or not.
The Central bank of Nigeria (CBN) as well as other federal agencies like Nigeria Deposit Insurance Corporation (NDIC), is charged with the responsibility of making sure that financial houses are duly registered and have the capacity (technical, human, and financial) to handle transactions.
These agencies perform checks and re-validation on routine basis to make sure that customers monies never go missing.
Page financials for instance, commenced business in 2014, is registered and licensed by the Central Bank of Nigeria, NDIC and other regulatory bodies. This is clearly stated on the website.
You should definitely look out for these before you put your money. Having operational licenses from these organizations means your investment is safe.
Investing without creating or managing an emergency fund
One of the leading causes of untimely death of investment portfolios is emergency.
We all have emergencies at one time or the other; family, work, relatives, school fees, health, car break-down etc. these emergencies are here to stay, and they will always need funds to handle at the time.
Without setting modalities in place that will cushion your emergencies, your investment portfolio will always be the go-to place.
So, from the money earned, set aside a part of it that will be channeled into something that can take care of misfortunes when they occur because they will.
The money can either be in a savings account where you can easily access it, or you can make an open ended investment with it.
This way, you shift focus from your long term investment and allow it to mature to full benefits.
Not researching the company’s capacity
Asides the regulatory bodies and licenses, there are certain things which you need to know that will help you relate with your financial services provider.
This is important because your relationship with your financial house also influences if you will allow your investment to mature or if you will liquidate out of anger and frustration.
Let’s look at some things you should definitely research.
- Customer service
- When you have questions, who would you talk to? Is there a number? Is it reachable? Do they even answer their phone?
These questions would require you to actually do some research on your own like pick up the phone and call. Or send an email and see if you will get a response.
Majority of the communication you will have with your financial house is going to be online, so you need to make sure they are available when you need them.
- Fast service
- What’s their response time? What’s the time it takes for their system to generate and complete transactions?
Nobody likes a slow service even offline, that’s why we’re always in a hurry in Lagos, isn’t it?
If you need to invest, how long does it take? If you want to liquidate, how long does it take?
Questions like this would give you an idea of the kind of human and technological capacity the financial house has in place.
- What channels do they use have available for transactions? Online? Mobile App? Debit Cards?
The behavior of this generation of users (customers) is not linear, we have multiple ways of doing the same thing, and we choose which is better for us at a given time.
The same applies to your financial service provider, they should have a platform that you are comfortable and familiar with.
They should provide you with options that facilitate your day to day life and not make it difficult.
At Page, we took the bold step of taking user experience out of this world. We made an incredible Mobile App that does more than just loans and investment.
The app pays bills, tops up, transfers funds to any bank account and much more.
We know our customers want it, and we made it totally easy for them.
We also allow customers to transact using online banking on our platform.
With our debit card also, you can perform any transaction in any ATM all over Nigeria and abroad.
This is what we call freedom for our customers. Transact the way you like.
- What is the technology strength of the company? How do they make critical decisions? Do they have AI investments? Are their servers down so frequently?
How long does their system maintenance last, and what times of the day do they do it?
Answering these questions will inform your confidence level about the business. You will know what to expect and you’ll be able to gauge if they really have the technology to handle your transactions.
- This seems to be the most important on the list, so I reserved it for the last discuss.
Security is first when you start talking about taking the right investment choice.
All the multi-facet security checks needs to be good. Security checks can be in the area of
- Credit card details – does the organization use an encryption capability?
- Web credentials – what happens to the information you fill on their website? Can it be hijacked by fraudsters? Do they use https or is it just http?
- Bank account info – Does the organization sell your bank info to other financial houses? Or will releasing your info cause a whole in your banking credentials?
- Personal information – will the personal info you share with them be escalated to the public?
A lot of these security checks can be done by simply visiting the company’s website and going through their terms and conditions on use of their website.
Investment is vital to long term financial freedom, but you need to be confident about your investment decisions and you need to know exactly what to expect from it. Do your due diligence and be confident to ask intelligent questions where it is not obvious.
By going through these 5-things list, you will understand what to ask or demand from your financial service provider.
If you feel confident and want to invest now, click here to get started.