Before you commit money to anything — whether it is a savings account, a friend’s business, a share tip from a colleague, or an online investment platform — ask yourself these five questions. Write them down. Make them a habit.
Question 1: What is the worst case? Not the best case — the worst. If this investment goes to zero, what happens to your life? If the answer is “I lose everything and cannot pay rent,” the risk is too high for your situation. If the answer is “I lose money but my basics are covered,” it may be appropriate.
Question 2: Is this return realistic? Compare what is being offered to the risk-return table above. If someone offers you 20% per month guaranteed, that is 240% per year — higher than almost any legitimate investment in the world. No credible institution offers that. It is a scam.
Question 3: Is the provider registered and regulated? In South Africa, any person or company managing investments or giving financial advice must be registered with the Financial Sector Conduct Authority (FSCA). You can verify any provider for free at fsca.co.za. If they are not registered, do not use them.
Question 4: Can I access my money when I need it? Liquidity matters. If you are likely to need this money within 12 months, it should not be in a fixed deposit, property, or any locked vehicle. Match the lockup period to your actual financial timeline.
Question 5: Do I actually understand this? If you cannot explain to another person how this investment works and how it makes money, you should not be in it. Complexity is often used to hide risk. The best investments for most people are also the simplest: savings accounts, TFSAs, and broad-market index funds.
