Investments aren't rocket science. Before putting your money in any investment, take time to understand it. Research what others in the industry are saying about it. Be sure you know how they're making money.

Any fund manager that makes their product seem overly complicated or keeps claiming to know something about the industry that nobody else knows (but can't explain it clearly to you) is a

4th Law of Gold: "Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep.
Of the three wealth killers: ego, laziness and greed, this law encompasses the first two."

A short story.

A few years back, a company hit the streets (churches) raising funds. Let's call it F**. I won't type up the full name because these days when I mention a business they find my village mates and tell them to make me take down the tweets.

F** was going to do something nobody has done in this market. They were a conglomerate of businesses in hospitality, fintech, education, agriculture etc.

At the time of the fundraising run, they'd done a few things. They had a school, one hotel (I think), and a money transfer business that was trying to compete with M-Pesa. These three or so businesses were their proof that they can do this!

I heard about F** through my mother. She was sold. She was now selling it to me. There were obvious red flags:
1. The business was raising funds from the general public without authorisation from CMA (another day we will talk about how CMA is sleeping on the job)

2. It was not clear how governance would work as *many people* had all invested small small money. 7k here, 15k there. I'm told even diasporans had invested their USD in it. The document my mom had to show for it was a *share certificate*

But like most con jobs, this business was derisive of regulation. When asked about CMA etc, it would say that those regulations are designed to kill the entrepreneurial spirit and to make sure the ordinary Kenyan misses out on good investments.

Haya basi

Like most con jobs, the investment had a sense of urgency.
*Buy your shares before date xyz as the prices will go up blah blah*

There was also a sense of exclusivity.

Back to my lovely mom and I. When I heard of hotels (I think they were to do 10 hotels in 2 years), I got curious. At the time, I was struggling to get a hotel business up and running. In five years, we'd just done our second hotel. So I wanted to understand their plan.

Running a legit hotel business in Kenya is tough! Especially as a new player. How were they going to do 10 of them? Did they have an operating company? Were they going to bring in an external operator?

They were promising to double investor money in 5 years. That would mean these hotels would need to make at least 20% in net profit from year one.

We debated for hours. I shared what the industry was making. It was nowhere close to what they'd been promised.

At the end, we agreed to disagree. I told her to invest but leave me out of it, but to share the millions when they became millionaires.

This was in 2013. They haven't seen a cent. For a few years they'd attend AGMs where tall tales were told. At some point the business was raising even more money.

Then it hit the headlines for fraud by some of its senior employees.

Today, we do not know what became of their big dreams. But millions of Kenyans lost their money.

F** is one of many in this town. Con jobs masquerading as legitimate businesses. Or businesses that start out legit, then realise that conning investors is much easier than running a business.

"Smart" folk have realized the way to do it. Start a legit business that clearly does not make money, and use it to raise money from gullible Kenyans.

Later claim that the business failed to make money because of COVID/the regulators/evil spirits/social media etc.

And I am not saying businesses do not fail. Many do, especially now when times are tough.

But a red flag for me is when a business promises impossible returns from the get go.

When questions are dismissed as hating. When people who understand the industry chuckle whenever the name comes up.

Chunga. Your investment may be at risk.

The streets say to make money you have to lose money.

For investors however, to make money, you need to learn how to NOT lose money. Preserve your capital.

Here's the difference between the streets and investing. If I lose money in business, I have gained lessons which if wisely applied, I can use to be a success in said business.

As an investor, when you lose money, you only gain a lesson on how not to lose money.

Fifth law of Gold

"Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment"

The laws are from the timeless classic, The Richest Man In Babylon.
A book I read at least once a year. Buy it. Read it. Buy it for your loved ones.
It's a quick read. https://www.amazon.com/Richest-Man-Babylon-George-Clason/dp/1505339111