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Digital technology has made investing easier than ever. In the past few years, several startups have leveraged it to connect the general public with great opportunities to grow their wealth. Domains like real estate and stock markets– once the preserve of the relatively wealthy –have now been opened up to small-time retail investors, who can now stake some of their savings on them.

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However, digital investment platforms aren’t all the same. They vary significantly with respect to the quality of products they offer, the market segments they target, and the degree of safety they can guarantee their users. If you’re going to use their mobile applications, you’ll need to be certain that they check all the right boxes for you.

Let’s make it easy for you to verify investment platforms. What follows are six questions you should get answers to before choosing an investment app.

What Do They Offer?

There’s a great variety of products available from investment technology startups in Nigeria: Eurobonds, treasury bills, real estate, agriculture, stock markets, etc. You may be pleased with the plethora of options on offer; but remember, they don’t all function the same way.

If you’re choosing one of these investment types, be sure that you already know what they are about. For example, if you opt for real estate investment, you should know where the properties in question are located, and how they’ll generate an income (whether it’s through rent or being sold). It’s easier to avoid losing your money to these schemes if you understand how they work.

What’s Your Risk Appetite?

This directly follows from the first point we’ve made. Investments come with varying degrees of risk. You are more likely to lose your money if you’ve placed it in the stock market (a high-risk investment) than you are if you bought into government-issued Eurobonds (low-risk). On the flip side, higher-risk investments tend to generate higher returns than lower-risk ones.

You should weigh your risk appetite before settling for an investment opportunity. InvestTech platforms may not be liable for your losses if they have warned you about the risks involved beforehand.

What’s The Company’s Track Record?

Do your due diligence before choosing a provider. There’s probably a lot of information on the web about the startups you intend to invest with. The absence of such information is a red flag you shouldn’t ignore. Look for comments about them on online forums, or ask about them yourself.

If it’s a relatively new startup, find out what you can about the founders (or members of the founding team). You’ll want them to be people who have some experience related to InvestTech, wealth management, or, more generally, a field that’s closely related to what they’re currently doing.

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Are They Registered With The Appropriate Authorities?

Don’t sign up with any company offering investment opportunities until you can confirm that they’re registered with relevant authorities. Taking this step can help you minimize your exposure to fraudulent entities. Such ‘companies’ are often not registered because registration could make it more likely that they’ll lose the funds they’ve taken if they’re found to have duped their investors.

In Nigeria, investment companies are registered with the Securities and Exchange Commission (SEC). Make sure the company you’re looking to invest with is registered with them.

What Fees Do They Charge?

The fees charged by InvestTech platforms will depend on the type of investment they’re involved with. For example, stock brokerages may charge a commission on every stock purchase or sale; wealth managers could take a fee for managing users’ portfolios, and impose a fine for withdrawals made before an investment plan expires.

Before you pick an investment platform, be sure to learn what its charges are. This will let you know the true costs of using them, and prevent you from feeling cheated if the fees are rightly deducted from your deposit.

Are There Potential Security Issues?

When you make the decision to invest money, you do so with the hope that you’ll get a decent return. So you’ll probably find it painful if all of your investment gets lost due to a security breach on the platform you’ve invested in.

You can reduce the chances of this happening by finding out how secure the platform is. FinTechs are typically expected to achieve bank-level security because their customers carry out sensitive financial transactions with them. Things you should ask about include multi-factor authentication, high-level encryption, and security certificates.

Final Words

On the whole, InvestTech has been a force for good. But lurking amongst the positives of tech-powered investments are a number of risks that ought to be taken seriously. You can use the questions we’ve posed here as a guide to choosing an investment app that’ll work well for you.

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This article was first published on 24th February 2022


Ikenna Nwachukwu holds a bachelor's degree in Economics from the University of Nigeria, Nsukka. He loves to look at the world through multiple lenses- economic, political, religious and philosophical- and to write about what he observes in a witty, yet reflective style.

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