The journey to financial freedom is paved with naira notes, but many young Nigerians keep stepping on the same investment potholes.
The Investment Rollercoaster: A Nigerian Story
Last week, my friend Kennedy called, sounding completely stressed out. “I just put my entire savings into this new crypto that’s supposed to ‘moon’ next week!” he exclaimed. I felt my stomach sink. This wasn’t the first time I’d heard this story, and I knew exactly how it would end.
“Let me guess,” I replied, “someone in a WhatsApp group promised 200% returns?”
His silence told me everything.
If you’re a young Nigerian trying to build wealth, you might recognize this scenario. The promise of quick riches is everywhere – from the latest crypto scheme to that uncle’s “guaranteed” import business opportunity. But while investing is indeed crucial for building wealth, many young Nigerians fall victim to common investment mistakes that can set them back years.
Why This Matters to You
Nigeria’s economy presents unique challenges. With inflation running high, currency devaluation concerns, and limited traditional investment opportunities, young Nigerians face a real time battle in wealth creation. But here’s the truth: avoiding the top investment mistakes can be more valuable than finding the next “hot” investment.
At Youth Empowerment Mobility (YEM), we’ve guided thousands of young Nigerians through their investment journeys, and we’ve seen these mistakes repeat themselves time and again.
Quick Takeaway: The Top Investment Mistakes to Avoid
Before diving deeper, here’s a snapshot of what we’ll cover:
- Investing without financial education
- Chasing get-rich-quick schemes
- Neglecting emergency funds
- Following the herd
- Putting all eggs in one basket
- Ignoring investment fees and taxes
- Making emotional investment decisions
- Timing the market poorly
- Neglecting long-term planning
- Falling for unregulated investment platforms
Now, let’s explore each of these top investment mistakes in detail and learn how to sidestep them.
1. Investing Without Financial Education
Perhaps the most damaging of all top investment mistakes is diving into investments without proper knowledge.
Imagine trying to drive a car without lessons – that’s what investing without education looks like. Yet many young Nigerians jump into complicated investment vehicles after watching a few YouTube videos or following advice from self-proclaimed “investment gurus” on social media.
“I see it all the time,” says a financial advisor at YEM. “Young people who can explain complex crypto terms but don’t understand basic concepts like compound interest, inflation, or risk diversification
How to avoid this mistake:
- Start with books on personal finance and investing fundamentals
- Follow credible financial educators who focus on principles, not just “hot picks”
- Consider taking structured financial literacy courses ([link to YEM’s free financial literacy resources])
- Begin with simpler investments as you build your knowledge
Remember: The best investment you can make is in your financial education.
2. Chasing Get-Rich-Quick Schemes
The dream of getting rich overnight is strong—especially when the economy feels tough and uncertain, like it does in Nigeria today.
But sadly, that dream often pushes many young people into making big mistakes, like trusting shady investment schemes that promise the world but deliver heartbreak instead.
From Ponzi schemes disguised as “investment opportunities” to suspicious forex trading platforms promising 30% monthly returns, Nigeria has seen countless young people lose their hard-earned money.
Tunde, a 28-year-old software developer in Lagos, shares: “I lost ₦1.5 million to what I thought was a legitimate crypto investment platform. The red flags were there – guaranteed returns, pressure to recruit others, emphasis on withdrawing profits quickly – but I ignored them because people I trusted were making money.”
How to avoid this mistake:
- Remember the golden rule: If it sounds too good to be true, it probably is
- Understand realistic return rates for different asset classes
- Research the background of any investment platform thoroughly
- Be wary of schemes that emphasize recruitment over actual product value
- Check if the investment company is registered with the Securities and Exchange Commission (SEC)
3. Neglecting Emergency Funds
Among the top investment mistakes, this one is particularly insidious because it makes your investment journey vulnerable to disruption.
Many young Nigerians pour all their available funds into investments without establishing a financial safety net first. Then, when an emergency strikes – medical bills, unexpected job loss, or family responsibilities – they’re forced to liquidate their investments at inopportune times, often at a loss.
“Building wealth is a marathon, not a sprint,” notes a financial educator at YEM. “Without an emergency fund, you’re running that marathon with a time bomb strapped to your back.”
How to avoid this mistake:
- Build an emergency fund covering 3-6 months of expenses before making major investments
- Keep your emergency fund in a liquid but interest-yielding account
- Automate contributions to your emergency fund
- Revisit and adjust your emergency fund size as your life circumstances change
4. Following the Herd
“Everyone is buying this stock!” “My friends are all investing in this new crypto!” “Did you hear about this new investment app everyone’s using?”
Making investment decisions based on what everyone else is doing ranks high among top investment mistakes for young Nigerians. FOMO (Fear Of Missing Out) drives many to jump on investment bandwagons without proper analysis.
In 2017, countless young Nigerians poured money into various cryptocurrencies at peak prices, only to watch their investments crash by over 80% in the following year. Many made the same mistake again during subsequent crypto cycles.
How to avoid this mistake:
- Develop your own investment thesis based on research, not peer pressure
- Understand the difference between investing and speculating
- Ask yourself: “Would I make this investment if nobody knew about it?”
- Practice contrarian thinking – sometimes the best investments are unpopular
5. Putting All Eggs in One Basket
Among the top investment mistakes, poor diversification can be particularly devastating when it backfires.
Too many young Nigerian investors concentrate their money in a single asset class. Sometimes it’s all in stocks, other times all in real estate, or increasingly common, all in cryptocurrency. While conviction in your investments is good, extreme concentration creates vulnerability.
Consider Mary’s story: “I put all my savings into commercial property in Lagos in 2018, convinced that real estate always appreciates. When COVID hit and commercial property values dropped, I had no other investments to cushion the blow.”
How to avoid this mistake:
- Spread investments across different asset classes (stocks, bonds, real estate, commodities)
- Diversify within asset classes (different sectors, geographies, etc.)
- Rebalance your portfolio periodically
- Consider Nigerian-specific diversification strategies, like having some foreign currency exposure
6. Ignoring Investment Fees and Taxes
This silent wealth-killer makes our list of top investment mistakes because many young Nigerians completely overlook it.
High fees can significantly erode returns over time. Similarly, failing to consider tax implications can lead to unpleasant surprises. Many investment platforms targeting young Nigerians charge excessive fees that eat into returns.
“I was excited about making 18% on my mutual fund investment,” says Ngozi, a 25-year-old banker. “Then I realized that after the 2.5% management fee and 1.5% administrative charges, plus inflation running at about 12%, my real return was minimal.”
How to avoid this mistake:
- Compare fee structures across different investment platforms
- Understand all charges: management fees, transaction fees, withdrawal fees
- Consider tax implications of different investment types
- Calculate the real (after-inflation, after-tax, after-fees) return on investments
7. Making Emotional Investment Decisions
Fear and greed are the twin enemies of successful investing, and allowing these emotions to drive investment decisions is one of the top investment mistakes young Nigerians make.
When investments drop in value, panic often leads to selling at the worst possible time. Conversely, when markets are euphoric, greed can lead to taking excessive risks.
“During the 2022 crypto crash, I watched many of my peers sell everything in panic,” a financial consultant at YEM. “Those who kept their emotions in check and stuck to their strategy have since recovered their losses and then some.”
How to avoid this mistake:
- Develop a written investment plan or strategy and stick to it
- Limit how often you check your investment portfolio
- Practice mindfulness about your emotional state when making investment decisions
- Consider automated investing strategies that remove emotional decision-making
8. Timing the Market Poorly
Attempting to predict market movements – buying low and selling high – sounds great in theory but ranks among the top investment mistakes in practice.
Many young Nigerians wait for the “perfect time” to invest, trying to predict market bottoms or tops. This usually results in missed opportunities or poorly timed entries and exits.
“I waited three years for the ‘perfect time’ to start investing in stocks,” shares Blessing, a 29-year-old accountant. “Looking back, if I had simply started when I first considered it and consistently invested over those years, I’d be much further ahead today.”
How to avoid this mistake:
- Implement a consistent investment schedule (like monthly contributions)
- Practice dollar-cost averaging rather than trying to time the market
- Focus on time in the market, not timing the market
- Remember that even professional traders rarely time markets successfully
9. Neglecting Long-Term Planning
In a country where immediate challenges often dominate attention, neglecting long-term financial planning is among the top investment mistakes young Nigerians make.
Many invest without clear goals, timelines, or strategies. Are you investing for retirement? A house purchase? Children’s education? Each goal requires a different approach.
“Young investors often come to me with a portfolio of random assets they’ve accumulated with no coherent strategy,” notes, finance manager at YEM. “Without a roadmap, they’re essentially driving blindfolded.”
How to avoid this mistake:
- Define clear, measurable financial goals with specific timeframes
- Create an investment strategy aligned with each goal’s timeline and risk tolerance
- Review and adjust your plan periodically as life circumstances change
- Consider working with a financial advisor to develop a comprehensive plan
10. Falling for Unregulated Investment Platforms
Completing our list of top investment mistakes is the increasingly common error of trusting unregulated investment platforms.
Nigeria has seen numerous cases of investment platforms disappearing overnight with investors’ funds. Without proper regulatory oversight, these platforms operate with minimal accountability.
“My colleague lost ₦3 million in an investment platform that promised 10% monthly returns,” recounts Victor, a 31-year-old medical doctor. “The platform had a beautiful website, testimonials, and even an office in Victoria Island. Then one day, everything disappeared – website, social media accounts, phone numbers, everything.”
How to avoid this mistake:
- Verify that investment platforms are registered with appropriate regulatory bodies (SEC, CBN)
- Research the company’s history, leadership, and track record
- Start with small amounts to test the platform’s legitimacy
- Be extra cautious with platforms offering guaranteed returns
Building a Solid Investment Foundation
Avoiding these top investment mistakes is only half the battle. Building a solid investment foundation requires positive actions too:
- Start with clear financial goals – Know what you’re investing for and when you’ll need the money
- Build financial literacy gradually – Understand investment basics before diving into complex instruments
- Create a diversified portfolio – Spread risk across different asset classes appropriate for your goals
- Invest consistently – Regular investments over time can yield better results than trying to time the market
- Stay patient – Wealth building is typically a long-term process
How YEM Can Help
At Youth Empowerment Mobility (YEM), we specialize in guiding young Nigerians through their investment journeys. Our approach focuses on:
- Financial education tailored to Nigeria’s unique economic landscape
- Personalized investment guidance based on individual goals
- Community support from like-minded young investors
- Access to curated, legitimate investment opportunities
Taking Action Today
Avoiding top investment mistakes starts with a single step. Here’s what you can do today:
- Assess your current investments for any of the mistakes discussed
- Create or revisit your emergency fund
- Develop a written investment plan with clear goals
- Schedule time for regular financial education
Remember, successful investing isn’t about getting rich overnight – it’s about making informed decisions consistently over time.
Join Our Free Investment Workshop
At Youth Empowerment Mobility (YEM), we’re more than just a platform — we’re Nigeria’s fastest-growing community for young investors. Through our workshops, community groups, and personalized mentorship, we’ve already helped over 500 Nigerian youth kickstart their journey to financial freedom.
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Have you made any of these investment mistakes?
Share your experience in the comments below or reach out to our team for personalized guidance.
