Risk defines entrepreneurialism and as an entrepreneur, you have to be willing to take risks on a frequent basis. However, not all risks are equal.
For instance, you’ll hear someone telling you to invest in Program ABCD so that you can get returns of up to 5% per day without working for it. Or Invest Ksh10,000 and then invite 4 other people and you’ll get 10% of what they earn…again without working for it…and so on.
Be watchful! Such scams have been dominating the headlines for the last 10 years. Investors, majority of them being small business owners in Kenya, have lost millions of cash yet no one seems to be taking note and advising them accordingly.
How do you tell a phony investment venture from a viable one? Here are some tips for you to carefully consider.
(1)Avoid investments that promise insanely high returns
The huge interest rates promised are not only unrealistic but also unsustainable (sometimes up to 5% per day). What happens is that, once you deposit your money with the so-called “fund manager” the scheme will collapse before you even recover a quarter of your money.
Think of it this way. If banks are currently offering loans at an interest rate of 20% per annum why would someone borrow your money and pay as much as 5% per day if he or she isn’t up to something bad?
(2)Avoid investment programs that don’t operate on a clear revenue model
“We invest in online Forex market”, “We are currently handling massive real estate projects”…these are just but a few of the fake claims made by architects of phony investment programs.
If you request them to produce documents for evidence, they’ll usually give you fake ones. Don’t buy their stories.
Our advice is that you should not invest in any type of business that does not have a clear revenue model. If possible always make a point of confirming the authenticity of the documents you are presented with.
(3)Don’t rush to invest simply because your friends are in it (do your research)
Don’t rely on someone else’s research. You’ll fail if you rely on hearsay. Before you rush to commit your funds to any sort of business ask yourself if it is the logical thing to do.
Does the investment idea seem long-term? Has it been tried and tested before? Who are the people behind it? In other words, take time to test the logic behind the idea.
If you smell a rat; run for the hills.
(4)Get rid of the “easy money” mentality
In the quest for quick growth and development, most small business owners often fall into the temptation for quick easy money. We fancy the idea of being told that we’ll become millionaires overnight.
Well, we are not saying that it is not possible to become a millionaire overnight. In fact, it is possible to graduate from a small-sized business to a medium-sized one in 24 hours. But you have to work for it. It takes, hard work, sacrifice and strategy.
So shun the “lottery mentality” and roll-up your sleeves ready to sweat for your success.
(5)Don’t take a loan to invest in an uncertain project
You hear that there is a deal somewhere that you can invest in and get 100% returns in less than 100 days and then you rush for a personal loan so that you can take advantage of the situation. Again, this takes us back to point number, second sentence.
Quick facts about “Get rich quick investment programs”
- You’ll lose your money 90% of the time
- Every cent earned in such schemes is stolen from a future investor
- It is illegal to run or recruit someone to join a phony investment program and you can be sued for the same
- Always seek expert advice and training before committing your hard earned funds to any project
Finally;
Before you invest in any investment plan out there, it is important to ask the right questions. How will my money be invested? What is the rate of return? What will happen if the investment plan fails, will I get my money back?
Always remember that if a plan promises you’ll get rich quick with no risk, or doesn’t tell you how your money will be invested, you should exercise caution before getting on board. Remember to follow us on Facebook.
