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Top 10 Risky Investments You Should be Careful about or Avoid In Nigeria

See the Top 10 Risky Investments You Should be Careful about or Avoid In Nigeria. Read further to discover why I have warned you.

An investment is any purchase of a good or service not necessarily for immediate use but specifically for generating profits in future. It literally means growing your money for continuous and additional profits.

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Everybody needs financial security, people are afraid of getting broke in future, to amass wealth to maintain their standard of living for themselves and their children and to increase their security.

A good investment would generate profit for an entire lifetime and can be passed down from one generation to another. In these hard times where the economy seems to be degenerating yearly, it is a necessity to invest; there is a need to plan ahead because of the inability to predict the government and their dwindling pension and retirement plans.

What does a bad investment imply? What is a bad investment? Any investment with very low or zero rate of returns is a bad investment.

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Businesses that appear profitable but deflate without warning are bad investments. Bad investments can be avoided when investors thread with caution, investors may need to seek the services of a qualified financial advisor to help especially with confusing investment.

When you are ignorant of how an investment works, you are likely to lose out massively because your lack of understanding will birth poor or wrong decisions on your side.

If an investment appears complicated, hire a professional to evaluate it or have nothing to do with it. Every investor needs to be cautious of investments with limited marketability and investments that require huge commissions.

Beware of investments that promise very high rate of returns with no information provided on risks; do not invest in a business you barely have knowledge of and as soon as an investment begins to show some warning signs, get your remaining assets out of it to save you from incurring a complete loss.

Top 10 Bad Investments You Should Avoid In Nigeria


These are fraudulent investment schemes that promote high rates of returns on a very short term with little risk to existing investors for the purpose of enticing new investors.

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They operate as legitimate businesses until they are no longer able to pay promised returns; they begin to die a gradual death. Ponzi schemes are awaiting disasters; they entice to destroy eventually. One of the first Ponzi schemes to gain grounds in Nigeria is MMM.

Its success birthed the emergence of many others which include NNN, Twinkas, Ultimate Cyclers, Zarfund, Givers forum and many more. Ponzi schemes gained momentum in Nigeria at a time when the economy was frail, the economy recession made matters as worse as people turned to Ponzi schemes for financial security and for an easy way out of poverty.

They actually provided brief relief to Nigerians and as expected, many reinvested and investors increased, Nigerians refused to see the threat these schemes posed and when they began to fail in their ability to pay up expected returns, many began to panic.

Investments stopped and huge amount of monies went down with the schemes, some business men totally lost their capital, others were left in debt, retirees lost their entire savings and till date people haven’t been able to get their monies back.

Read the Impacts of Ponzi Schemes on Nigeria economy


This means to play a game of chance, to risk money or valuable possessions by bet or wager. Nigeria has legalized three types of gambling; sport betting, lottery games and casino gambling.

There are three operational kinds of gambling; lotteries, land based casinos and online gambling. However, a lot of illegal gambling goes on in underground casinos, football mafia, unauthorized lotteries and illegal betting sites. Many people have likened gambling to investment but I hold a different view because their underlying principles differ.

Gambling is a bet that sometimes leaves the gambler at a disadvantage irrespective of how smart he seems to be. You don’t own anything by gambling but you own shares, stock or bonds when you invest.

Gambling is a zero win venture that cannot be likened to investments. It is better to invest your funds than to gamble the away. It is way better to spend savings on a small scale enterprise like selling provisions and sachets of pure water than to spend it on naira bet with zero chance of winning.


This is the act of giving out cash loans to those in need to be repaid on short terms at a very high rate of interest. Money lending can be done solely by individuals with the financial capability or a group of contributors who come together for the purpose of lending money on high interest rate.

It is prevalent in Nigeria today, a practise that sucks the poor dry as a result of the high interest rates which can be justified by the risk involved. In Nigeria, the laws regulating money lending are lackadaisical, parties involved are left at each other’s’ will.

You may lend money to someone and they abscond with it; sudden death also brings lots of bad debts to money lenders. It is a risky venture that may pay well at the onset but encounter lots of hindrances later on. Apart from this, money lending is exploitative.

Read more on: 5 Ways to Recover Debt Lawfully from an Individual or Organization


These are savings and loans associations that provide savings and loans services. In Nigeria, people join thrifts to raise funds for new or existing projects.

It is a quick way to financial liberty but the issue lies in security. Where anti-fraud checks aren’t put in place, a fraud can easily occur resulting a huge loss. So when next you want to be part of thrift, ensure that there are no loop holes.


Investments in real estates can go wrong. Real estate is capital intensive, it is very essential to carry out findings and make use of professional help when seeking to invest in real estate.

There have been several cases of dubiousness involved in Nigeria regarding real estate investments, property owners have been said to sell a particular property to several people at the same time.

Where transactions aren’t properly structured and title of property isn’t properly secured, one may incur loss.


The foreign exchange market is a market where currencies are traded. Currencies are traded to facilitate international trade and travel. For instance a Nigerian tourist in America must pay in dollars to see the sites and vice versa.

This explains why the foreign exchange market is the largest financial market in the world. One has to be careful when trading in the forex market because there is always a quick reaction to information released and this reaction influences the price of currency.

The current recession in Nigeria affects her exchange rate as the naira suffers and until the economy is quite stable, trading in forex may lead to loss of invested capital.

I will recommend that you learn how to trade Forex before you venture into the business


Nigeria has two major seasons, the dry and rainy. There are goods that sell mostly in a particular season, for instance rain coats sell better when it rains as the demand is high. Selling seasonal goods in the wrong season is a bad investment that may cost you your business capital.


Sale of perishable goods can be a bad investment if not properly handled. Before you venture into selling perishable goods like fruits and vegetables in large quantities, you must ensure that your business is located at place where lots of customers can easily have access to you, for delay in sales will lead to a loss of goods and money.


Before the internet boom, a cyber café was one of the most lucrative businesses. But with the recent development in phone production and affordability of data, cyber cafés are barely visited.

There is a whole lot you can do with a mobile device and most people do own printing, photocopying and laminating machines in their homes, as it is preferable to access the internet from the comfort of your home. Opening a cyber café now is not advisable as the returns will be low.


In almost every major city in Nigeria, motor cycles have been banned by the government and with time, there may be a total extinction of motor cycle transport.

It is better to own a tricycle fondly known as keke napep, which is safer and has been authorized by the government to replace the motorcycles. You can invest in transport business on a much larger capacity.

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Lami Ogar

Lami is from cross river state and holds a B.sc in accounting from a Nigerian university. Writing for her is a form of detoxification, she has written several articles for Essence magazine and runs political commentary on twitter. InfoGuide Nigeria is a team of Resource Persons and Consultants led by Ifiokobong Ibanga. Page maintained by Ifiokobong Ibanga. If you need a personal assistance on this topic, kindly contact us.

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