By Babajide Komolafe

To make more money, you must not only save, you must also invest. A lot of people know this and hence, seek various ways to invest their money.

However, many have lost money due to bad investment decisions, some due to greed, but most due to lack of knowledge.

For example, it was reported that about 600,000 people lost $800 million to the collapsed Crypto Bridge Exchange, CBEX.
A huge number of people lose money to bad investments because they do not know what to consider before putting their money in any investment offer.

The following are some of the major factors to consider before you invest your money in any investment offer from any organisation.

★Consider the Underlying Business
When you put your money in any investment, the organisation behind it will use the money to do business that will generate profit from which, it will pay interest or dividend to the owners of the money. For example, if you invest your money in a fixed deposit account with a bank, the bank will lend the money to those who need it and charge interest. The bank then pays interest to you, the owner of the money.

Similarly, if you lend your money to Dangote Cement, by buying its commercial paper, Dangote will use the money to produce cement, sell, and from the revenue, repay your money with interest.

So, before putting your money anywhere, critically consider what the organisation offering the investment will do with your money to make more money for you.

★You must consider how profitable and risky the underlying business is.
For example, investment in organisations that offer goods and services that people will always need (necessities) and hence patronise.

That is why banks that are well managed always record an increase in revenue and make profit in spite of what is happening in the economy. This is because people and businesses will always need banking services.

★Consider the Return
The first thing to consider of course is the return. This could be the interest rate or increase to the money you are putting into the investment.

To ensure good return on your investment, you must consider the inflation rate. The return should be higher than the inflation rate, which is currently about 22.97 per cent. You must also consider returns offered by alternative investment offers.

However, you must recognise that investment offers, aimed at defrauding people usually come with high returns. They offer an interest rate that is far above what is currently obtained in the country. Sometimes, fraudulent investments promise huge increases in the money invested in a relatively short time. For example, the collapsed CBEX offered 100% returns in 30 days!

Interest rates currently range between 15 and 30 per cent in the economy. So, you should view with suspicion any investment that offers interest rate or returns far above this range.