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3 Due Diligence Steps For Investing In Nigeria

Protecting your hard-earned money is crucial for becoming a successful investor, whether you are a Nigerian living abroad or in Nigeria.

In this newsletter, we will outline three actionable steps you can take to detect scams and avoid becoming a victim.

1. Conduct Thorough Research

Investors who fall victim to scams are often lured by promises of unrealistic returns on their investments. These returns are typically very high for a short duration, appear to carry little to no risk, and are almost guaranteed, regardless of the macroeconomic situation.

Scammers often attract potential victims by showcasing quick returns given to friends and family, creating an illusion of legitimacy.

To avoid such scams and many others, it’s essential to always do your research. Investigate the type of investment being offered (real estate, business ventures, etc.), verify market conditions, and assess if the promised returns align with realistic, competitive rates. Ask numerous questions and request critical documents for review. You can consult with experts to examine their audited financial statements, review land titles with third-party agents, and more.

Put in the hard work and never take their word for it; conduct your independent research.

2. Observe Their Behaviour

Many sophisticated scams will go to great lengths to obtain the necessary government registrations and certifications to gain your trust.

However, one way to protect yourself from such scams is by closely observing their behaviour.

They may appear professional in their appearance and communication but take note if they pressure you to make quick decisions. Legitimate investors will respect your need for time to consider and will thoroughly answer your questions.

Be wary of platforms or individuals who adopt a "threatening" approach, insisting that if you don't decide quickly, you'll miss out on a valuable opportunity. Genuine investors will never try to strong-arm you into making hasty decisions.

Another red flag is if the salesperson becomes overly familiar or uses technical jargon to dodge straightforward answers. Always insist on clarity and written confirmation of all details.

By carefully observing their behaviour both in person and online, you can avoid their well-crafted traps.

3. Maintain A Network of Investors And Experts

It’s beneficial to be part of a community, whether it’s a diaspora group that allows you to connect with other investors or an agency that provides independent third-party opinions on investment deals.

This network can save you a lot of potential trouble by allowing you to run through investment offers with others before proceeding.

Some scams will try to enforce secrecy under the pretence of protecting your investment. However, no legitimate investment should involve a degree of secrecy that you cannot validate through other investors and local experts such as lawyers, financial advisors, and business consultants.

Action Steps

Whether you choose to conduct your due diligence personally or delegate this responsibility to a third party, it’s a critical task to prevent being scammed.

Contact us for comprehensive due diligence services that will not only protect you from scams and bad investments but also provide you with a clear understanding of the risks and challenges associated with investing.

SME TV

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