Case # 1:

In January 2020, a young man that I have been having a mentoring relationship with since 2017 put a call through to me to announce a great income opportunity he wanted to jump into.

He was doing well in his company as a top-level marketing executive. As he explained, a friend had sold an investment idea that would see him getting a monthly return that was more than his monthly salary. He visualised how the deal would turn him into a wealthy person within a very short period.

I asked him to share with me what the person selling the deal to him would be investing the money he would collect. He could not give any satisfactory explanation. He said he trusted his friend and that everything would work out well.

I counselled him against it, but he went ahead and staked his money there and recruited three other friends. He went a step further: he got his wife, who was a teacher, to resign from her school so that he could set up a business for her.

Interestingly, everything went well for about five months. The guy credited his account with a handsome amount of money, which came from his direct dividend combined with the additional money from his referrals.

Then, after the sixth month, the guy delayed about 10 days before crediting his account with the due returns. Then, after the sixth month, the flow ceased, and the guy vanished from his radar.

When he eventually showed up, he manufactured several stories on why the flow ceased. To cut the long story short, the guy took the investment merchant to the Economic and Financial Crimes Commission (EFCC), but unfortunately, the antigraft organisation could not do much. The case is still hanging, and our man is now in a great dilemma.

He lost his job. His wife could not get her proposed business off the ground, and they have two young children to nurture.

Guess the rest of the story.

Case # 2:

This happened far back in 2007 when investing in the stock market reached a crescendo, as ordinary investors were made to believe they could rake in huge returns speedily by investing in any stock in sight.

At the time, almost everyone, including taxi drivers, became investment analysts.

A certain middle-aged man, who was running a successful school jointly with his wife, dipped his hand in their savings, without sharing his dream with his wife and invested it secretly hoping to surprise her with huge returns in a short time.

He went further to borrow money from his stock brokers. Contrary to his expectations, the stock market began to misbehave. To cut the story short, he lost all his money. The secret was let out of the bag as his wife discovered. Their school was closed. Eventually, they divorced.

Figure out the rest of the story.

Case # 3:

A seasoned journalist had attended a seminar where an individual, introduced as a Forex Trader, mesmerised the audience with his ability to turn around invested money quickly and with great returns.

The journalist approached the “Investment expert” after the class, and they struck a deal. He parted with $4,000 the following week, and for three months he got his account credited with some dollars. But after the third month, the usual stories started to flow in.

Eventually, everything ceased. But our journalist decided to take the investment expert to the police. When the police arrested the investment expert, who happened to be a disabled individual, they ultimately advised our journalist to swallow the bitter pill: his money had gone with the winds, and there was no hope of recovering his money.

You are familiar with these lines, I can bet. The question I have always asked is, what makes people think that they can put N100,000 in investment and expect to rake in more than 50% of invested money monthly when the rate of return on average money market instrument is less than 15% per cent per annum?

We all remember Forum (“everybody come inside”), a microfinance bank operated by one guy called Owolabi, in the 1990s who offered mouth-watering returns so huge that many banks turned in their depositor’s money to him for a bit of the action. The collapse of that microfinance bank created spiral effects that led to the collapse of a few financial institutions.

It is surprising that despite the repeated disappointments from the Ponzi scheme operators and several warnings from the Securities and Exchange Commission (SEC), many Nigerians continue to patronise them.

Experts attribute greed to the continued trend of investing in instruments that fit no reality.

As a way of educating the investing public on credible investment options available, THISDAY Economic Insights Unit (TEIU) decided to start a series of special reports dedicated to educating the investing public on available investment options.

In the first of the series to be published on Monday, we are focusing on MUTUAL FUNDS.

In the special report put together by the very best of THISDAY analysts synthesising views from investment experts, we shall be addressing the questions:

  • What is a mutual fund?
  • How have they fared in Nigeria?
  • What are the compelling reasons people should consider investing in mutual funds?
  • How would people select the best mutual funds to invest in?
  • What is the future of mutual funds?
    And many more.

In putting the report together, we worked with the Fund Managers Association of Nigeria, FMAN, under the able leadership of its president, Mr. Aigbovbioise Aig-Imoukhuede.

We interviewed several FMAN members. We also spoke with a variety of individuals ranging from operators to investors and analysts.

In the report, for instance, Abimbola Olashore, a tested hand in the business of investment, says that Nigeria is currently experiencing strong demand for investment options, a growing middle class with disposable income, regulatory reforms improving investor protection, increasing digital adoption and fintech integration and collaborative potential with local and foreign financial institutions.

Finance expert, Prince Yemisi Shyllon, however, recommended to investors not to invest in equity mutual fund because it has a very high risk amid the current business operating environment in Nigeria.

According to him, the debt mutual fund has numerous opportunities, and he recommended it for investors at this period, stating that the money market mutual fund has low risk and, of course, investors with small capital can invest.

We suggest you grab your copy of THISDAY next Monday to peep into the rich world of mutual funds investment in Nigeria.

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