What To Look Out For Before Investing Your Money In Any Company

September 8, 2022

Written by Dorcas Obenewaa Owusu

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The Menzgold saga was a national disaster. It’s been 5 years now but its business model is still not clear. Till date, there are still debates over whether or not it was a Ponzi scheme. 

Not very Ghanaian was affected though. But most have experienced their own versions of investments gone wrong. 

So today I’d be dishing out a couple of quick tips you can fall back on whenever you want to invest in any business or company. As usual, let’s roll: 

Make sure you understand the business

Never pump your money into a business you don’t fully understand. Yeah it’s easy to get carried away by the promises, prospects and dizzying figures. But it’s better to know how exactly the business operates before buying into it. 

Do your own (thorough) research on both the people and money management qualities of the founders. We’ve all heard of at least one story where a company collapsed because of poor management 

Ask questions. Read or listen to customer reviews about the product or service offered by the company. Talk to employees too if they’d be open enough. Spot any red or green flags before you commit 

Find out if it’s registered

The Registrar General’s website is the source of truth for all registered businesses in Ghana. So if you want to verify if a company is registered, that’s one of the first sources you should check

If it’s a bank or financial institution, you can visit the Bank of Ghana’s website to see if it has a license to operate. 

Do due diligence, double check if these institutions have a genuine license or proper documentation to operate.

Don’t fall for the wild stories of shady companies that promise unrealistic returns after investment. If it’s too good to be true, then it’s too good to be true 

Examine their track record 

For established companies, you can check their performance on the stock market, business reports, milestones, key achievements as well as failures. Also look at their experience, longevity and how they’ve been able to evolve and stay profitable overtime 

Understandably, smaller companies won’t have such an expansive business history to show, but you can study what they do have now and make a decision based on that. Aside the company’s performance on the market, find out about the key milestones, long term plans, and any other relevant information you can lay your hands on 

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Check their online and offline visibility 

Does the company have a professional website? An active social media presence? What about mentions in the newspapers or radio? Is it registered on Google My Business? Can it be found at a physical location? 

Of course not all companies will meet all these requirements. For instance, most smaller companies might not have a website, but they will be very active on social media 

But whether big or small, every company must have some sort of visibility. Word of mouth is powerful but it’s not enough when there’s money involved and you need tangible evidence. 

Talk to an expert 

When in doubt, talk it out. It’s as simple as that. Even if you’re a 1000% sure of the company you want to invest in, it wouldn’t hurt to get a well-informed secondary opinion 

Experts may also notice some things you may have missed during your research and give you pointers on how to navigate them.

Don’t invest money you can’t afford to lose

Investment itself is a calculated risk. That’s why the financial gurus don’t advice investors to put all their eggs in one basket and risk losing it all 

In this case, I’d say don’t push all your money into that one company, no matter how tempting the returns. 

So if you are fully convinced your investment is in safe hands, then it’s better you start small. With money you can afford to lose, just to test the waters and leave room for risk 

And that’s the end of another financial sermon. I hope all believers were blessed today. See you next week for another chapter

About Mesika

Hey there, my name is Isaac Sesi. I built Mesika to provide free personal finance resources online to help young Ghanaians become smarter about their money.

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