Every now and then there is a viral story on the internet about someone who put their money in an investment platform and got scammed, and it is estimated that Nigerians have lost about N300 billion to investment fraud. Knowing how to spot bad or suspicious investments is therefore very important.

While a good investment might generate high returns, a fraudulent one can cost an investor a lot of money within a short time. So, even with prompt market timings, it is important for investors to be patient and manage their portfolio risk regularly by researching each investment product and diversifying their portfolios.

The following are some investment warning signs that new and existing investors must pay attention to.

• If its too good to be true, it probably is
  Look out for things like outrageous return on investment, unrealistic growth plans and bogus promises. That investment platform offering you 112% ROI in three months is probably a scam.
• Read the fine print
  What will your funds be invested in? Did the company provide this information? If you do not understand their business model, you should not proceed.
• It’s in the details
  Investment scams are often shoddy! Websites may have typos or are non-existent, addresses are vague and often untraceable, information is either too much or too little. You can easily spot these things when you look critically and avoid them.
• Know your investment company
  You need to do a little due diligence, who are the promoters of the company and what is their track record? Remember the story of the 21-year-old investment banker who defrauded investors? A little due diligence (or google) would have prevented that.