Making Good Investment Decisions for Sustainable Returns

Goddy Egene

The expectation of every investor is to reap good returns on the investment made. However, investors have different level of risk appetite. Some have low appetite and such investors are more conservative in the investment decisions. On the other hand, some have appetite for high risk and most of the time, such investors get their fingers burnt because they embark on such investments without professional advice.

The recent ugly experience of some investors, who lost their money to CBEX, a digital investment platform, has reinforced the need for investors to be more careful in their investment decisions. CBEX, a digital investment platform, offered investors 100 per cent profit after 30 days of purported AI trading. The trading platform started operations in 2024 after receiving registration approval from the Corporate Affairs Commission(CAC) on September 25, 2024, and the Economic and  Financial Crimes Commission (EFCC)’s Special Control Unit against Money Laundering (SCUML) on January 16, 2025.
But about  600,000 Nigerians, who reportedly invested in the scheme and lost N1.2 trillion after it collapsed on April 14, 2025. According to investment analysts, any investor who wants to play safe should invest in a market that is well regulated such as the money or capital market.
They said investing in Ponzi schemes exposes investors to a very high risks just as witnessed in CBEX and other similar schemes in the past.

SEC Warns against Ponzi Schemes
Given the experience of CBEX investors, the Securities and Exchange Commission (SEC), the regulator of the nation’s capital market, has restated its warnings against operations of unregistered and regulated schemes.
The Director-General of SEC,  Dr. Emomotimi Agama, said that the CAC registration and SCUML certificate from the  EFCC are not enough to show that an investment firm has been registered in Nigeria.
According to him, it is crucial that Nigerians understand the dangers of putting their hard-earned money into ventures that are not registered or regulated by the SEC.
He said:  “It is disheartening that some Nigerians and foreign accompanies have specialised in duping Nigerians and the government won’t sit and watch Nigerians being duped and this is what SEC is coming out to the people to educate them that if it too good to be true, then watch out.
“We have seen many Ponzi schemes in the past and the Investments and Securities Act(ISA) has been signed into law by the president and the law recommends  heavy  fine and 10 years imprisonment for offenders of ponzi scheme.”
“So, that has empowered us to be in a better position to flush out all these fraudulent investment schemes that are damaging our economy.”

Apart from warning investors, Agama said the commission has intensified its sensitisation programmes to education Nigerians on the dangers of patronising illegal schemes  that will lead to losses.
“We are using our sensitisation outreach to bring information to our people  and tell them that we are here to assist them to confirm legitimate investment schemes and we are letting them know we feel their pain.
“As we are doing this, we have helped to educate them against being duped. CAC registration and EFCC certificate is not enough to show that the company is registered with SEC and these are red flags.
“Training programmes being organised by these people to lure people into their schemes are also illegal.  Verify before you invest in any scheme and that is our message to Nigerians,” he said.
Agama explained that apart from the N40 million fine,   there are  penalties and or the sanctions that will be meted against  operators of ponzi schemes according to the new law..
He said: “One of the basic things around sanctions is that there will be disgorgement, and disgorgement means that we are going to make sure that every profit and every gain that has been achieved in the process of defrauding Nigerians will be gotten back.”  

“It is not about the quantum of the fraud, it is about sanctions that would deter people from even getting into it.  
“The new law provides the SEC the powers to be able to do that and even more to go after these people, bring them to book and make sure that we are able to restitute the citizens as long as much as possible.”
Apart from  the prosecutorial power, Agama said the new ISA has also provided the SEC with the power to be able to obtain and request telephone conversations and all other conversations that are required to prosecute Ponzi scheme operators.
According to him, with the new law, the commission now has all it needs to come against bad operators and bring succour to Nigerians.
He stated this would also allow the commission to get the “bad guys” out of the way and make sure that people are more confident and happier to invest in the Nigerian market, knowing very well that the investor protection responsibility of the SEC has now been enhanced.

Capital Market as Good Investment Option
Some investors have recommended the stock market as a better investment options and warned against patronage of Ponzi schemes. They said that apart from improved regulation of the market, investors can see and feel what they are investing in and also receive different forms of benefits.  Such benefits, they explained, include: capital appreciation, dividends and bonus shares.

For instance, the National Coordinator, Pragmatic Shareholders Association of Nigeria (PSAN), Mrs. Bisi Bakare,  strongly advised against Ponzi schemes, saying investing in stocks have many benefits and  is relatively  safer.
She said: “As a seasoned investor with over three decades of experience in the capital market, I strongly advise against investing in Ponzi schemes that promise unusually high returns, such as tripling your money within 24 hours. These opportunities often carry significant risks and may not be sustainable. And CBEX isn’t an isolated case of investors losing out. This pattern has been  repeated over the past two decades. Schemes like MMM, another one last year, and now CBEX have come and gone. Many people, especially Nigerians, seem not to learn from past experiences. Mark my words, in six months, another Ponzi scheme will emerge, and the same investors will likely fall for it again.”
 “I strongly advise Nigerians to run away from Ponzi schemes and instead invest in legitimate opportunities such as the capital market, fixed deposits, government bonds, which offer more stable and secure returns on the investment,” Mrs Bakare added.

Also speaking, the National Coordinator, Independent   Shareholders Association of Nigeria (ISAN), Mr. Moses Igbrude, said anyone who has participated and is still participating in Ponzi schemes is as a result of greed and a mentality to get rich quick.
“The fraudsters/criminals explore and appeal to emotions of greed of the individuals. How can a reasonable or rational person invest or put his or her money into an investment that doesn’t produce any products or services with huge promises of return on investment.  Ponzi schemes will continue to be explored by fraudsters as far as individuals are greedy and continue to chase after get-rich-quick schemes.  Continuous education and publicity may help to reduce or eliminate it,” he said.

Improved Dividend Payment by companies
One of the benefits of investing in the capital market is receiving dividends when  companies declare profits. When companies post improved profit after tax, there is every tendency that they will also reward shareholders with higher dividends. This has manifested among listed companies recently for the 2024 financial year. Manufacturing companies and banks are known for declaring good  dividends, which are cherished by shareholders.  
 Guaranty Trust Holding Company (GTCO) and  Zenith Bank Plc, which held their its annual general meetings(AGMs) recently rewarded investors with impressive dividends.

GTCO surprised the capital market community by paying shareholders a total dividend of N8.03 kobo per share in 2024 financial year from N3.20 total dividend paid in 2023.   The declared N8.03 is the highest dividend payout in the GTCO’s history and in the financial sector in Nigeria.
Similarly, Zenith Bank Plc  recommended a final dividend of N4 per share which in addition to the N1 per share as interim dividend amounted  to N5 per share, up from N4 of 2024. More banks and companies are expected to reward shareholders with similarly higher dividends in the days ahead as they hold their AGMs.

Capital Market Growth, Prospects for Investors
The prospects of investors enjoying  better returns in the current year emerged at the end of April following reports that the  stock market section of the Nigerian Exchange Limited (NGX) appreciated by N3.73 trillion by market capitalisation in the first four months of 2025 to close at N66.496 trillion.
Capital market analysts attributed the stock market N3.7 trillion growth to impressive 2024 performance by listed companies and the recovery of some companies in their first quarter ended March 31, 2025 corporate earnings released on the Exchange.

Figures compiled by THISDAY showed that the stock market opened this year at N62.76 trillion, gaining N3.73 trillion or 5.9 per cent to close on April 30, 2025 at N66.496 trillion.
Specifically, the stock market appreciated by N1.95 trillion in January, attributable to caution trading by investors in some fundamentals companies quoted on the exchange.  It appreciated by N2.48 trillion to close at N67.193 trillion in February, while it went down by  N936 billion in March as investors shifted attention  to money  market instruments.  However, it gained N239.03 billion in April 2025 to close at N66.496 trillion.
Commenting on the performance, the Managing Director, Globalview Capital Limited, Mr. Aruna Kebira, said   the  stock  market  in the first four months of 2025 witnessed the tanking of inflation figures and CBN retaining interest rate at 27.50 per cent.

He said: “Those parameters alone gave the capital market investors a moment of respite in first four months of 2025.”
“The yields in the money market are not looking as attractive as they were in 2024, making discerning investors in search of better yields consider the capital market as their investment destination.”
“In the last MPC, the MPR was retained, including other metrics. This is sending positive signals that as the inflation figure and money market yields are downward looking,  the MPC would have a reason to tinker the MPR downward. Which always is not fixed income friendly.”
“The release of both the UFS and AFS of issuers into the market was another booster as 80 per cent cannot be classified as lacklustre.  Then, there was a follow-through with quality dividend declarations. We saw the banking sector pushing their limits with relish and are happy doing so.
“Zenith Bank and  UBA  paid N4.00 and  N3.00 final dividend, while GTCO paid a whooping N7.03 as final dividend to shareholders.”

According to him,  the performance of the stock market in Q2 2025 would be hinged on the quality of the first quarter of 2025 results.
“If the various issuers demonstrate a performance higher than the corresponding period of 2024, the market will move to appreciate their prices. I also see an improvement in the liquidity around the stock market arena, which will boost market participation and invite the bull into the market,” he said.
In their assessment,  analysts at Cordros Research stated that, “We believe the domestic equities market might respond positively to the MPC’s decision to pause interest rate hikes as investors assess the likelihood of policy easing in the medium term.”
 “We also expect to see some rotation into sectors positioned for expansion in a lower-rate environment, particularly the manufacturing sector, as lower financing costs, improved input cost dynamics, and stronger consumer demand enhance growth prospects, making the sector more attractive to investors.”