My Money Mistake is a weekly PiggyVest series that explores the worst money mistakes real Nigerians have made, and the lessons they learnt from it.
For this week’s episode of My Money Mistake, we spoke to an IT Auditor who lost over ₦3 million to Ponzi schemes. He tells us about how it happened and the lessons he learnt from the experience.
Could you tell me about your money mistake?
Sometime last year, as a way to stay on top of the rapid devaluation of the naira, I decided to invest some of the money I had in my account. I saw an ad for a forex investment company on the island and a friend introduced me to another company. I invested a little over ₦1.5 million in both.
How did that go?
The first issue was that I wasn’t paid on time. They said it was because of banking issues, and it made sense to me. The second company also had an excuse, so I got suspicious and asked the person who got me into it if they had been paid. She told me there was a delay due to banking issues.
Then, the first company said their account was frozen because they had too much money and were paying out too much. That sounded odd, but I accepted it because strange things happen in Nigeria sometimes. It was only when I checked Twitter and saw many people complaining about not getting paid for months that I realised they were using new investors’ money to pay off the old ones. It was a scam; it was not a real forex company.
What did you do?
I went to their office the next day, but it was closed. The security guard told me that some people had come and caused trouble, even hurting the staff. They had to close down. Surprisingly, the owner of the company is a pastor. There were no warning signs because he’s active on social media and it all seemed legitimate. He even went live on Instagram, prayed and explained the situation. The police went to his church, but he wasn’t there, so they arrested his father. Even though I lost my money, I held onto some hope that things would turn around. Eventually, he admitted it was a scam.
How about the second company?
A few days later, the CEO of the second company also announced that they were going to address the issues they’d been experiencing on Instagram live. It felt like being fooled twice. The last I heard, he was nowhere to be found.
It must have been hard losing such an amount of money. How did you feel?
I felt a certain level of stupidity. It’s my job to understand how companies work financially, but I was so carried away with wanting to stay on top of the devaluation of the naira that I wasn’t as cautious as I was supposed to be.
It cost me a lot of mental stress and almost led me to become very wasteful with money.
How long did it take to recover from that moment financially?
It didn’t take too long, thankfully. That’s because I earn a decent amount of money. At least, I earn above what is considered decent in Nigeria, so I was able to recover quickly. At the time of the loss, I still had some amount of money left in my account.
But it took a while to eventually get to a mind space where I could start seeing the value of savings and emergency funds and start rebuilding that personal culture again. It’s not where I want it to be yet, but it’s at almost there
What lesson did you learn from this experience?
I learned two important lessons. The first is that when you’re promised very high returns on an investment that’s vague, it’s very likely that you are about to be scammed. If it sounds too good to be true, it probably is.
The second lesson is to not think you’re too smart to be scammed. Sometimes, when you’re too confident, you miss some of the obvious signs that a more cautious person would notice in an investment.