Investing 101: The Basics of Investing in Nigeria

The pandemic highlighted the importance of financial literacy. It's so important to understand how we budget, plan for retirement, invest, plan for unforeseen events and really make sure we are prepared for these events in the future.

Let's narrow our focus on a key part of financial independence – investing.

What is "Investing"?

Investing allows you to grow your savings so that you can achieve your financial goals. Although investing comes with risks, it generates better returns than saving your money in a bank. Furthermore, compounding allows you to earn more by re-investing the money you earn on your investments. If you start your investments early, time and compounding will multiply your wealth beyond your imagination over a long period.

 

 

Tip: If you start at an early age, you’ll also have to invest less money to reach your retirement goals.

Investing is a lot simpler than you think. You can open an account online with a minimal amount of money and schedule automatic withdrawals from your bank account to your investment account each month.

Investing in Nigeria can be a great way to grow your wealth and secure your financial future.

However, it is important to do your research before committing your money to an investment. Here are some steps you can follow to start investing in Nigeria:

Determine your investment goals

Do you want to grow your wealth over the long term, or do you need to generate income in the short term? Understanding your investment goals will help you choose the right investments for you.

Research the market

Before you invest in any country, it is important to understand the economic environment of that country. This will help you make informed decisions about which investments are likely to be the most successful.

Consider using a financial advisor

For a fee, a financial advisor can help you make informed decisions about your investments and provide guidance on which options may be the most suitable for your needs. They can also help you create a diversified portfolio to spread your risk and maximize your chances of success.

 

 

Choose an investment vehicle

There are numerous investment opportunities in Nigeria, including stocks, bonds, mutual funds, and real estate. It is important to choose the option that best fits your investment goals and risk tolerance.

Monitor your investments

It is important to regularly review your investments and make adjustments as needed. This may include selling off underperforming investments and investing in new opportunities as they arise.

Types of investments available in Nigeria

Below is a list of some of the diverse investments you should know about:

Stocks

Investing in stocks allows you to buy shares of ownership in a company and potentially earn a return through dividends or capital appreciation (increase in share price). The Nigerian Stock Exchange (NSE) is the primary stock exchange in Nigeria and offers a range of listed companies across a variety of sectors.

Bonds

A bond is a long-dated debt instrument that allows an investor to lend money to a government or company in exchange for periodic interest payments and the return of principal at maturity.

 

 

Mutual funds

Mutual funds offer a way for investors to gain exposure to a wide range of assets and can be a good choice for those who are new to investing or don't have the time or expertise to manage their own portfolios. For a fee, fund managers pool together the money of multiple investors, to buy a mixed basket of stocks, bonds, and other securities.

Real estate

There is strong demand for housing and commercial property in Nigeria. Real estate investments can take the form of owning rental properties, buying and reselling properties, or investing in real estate development projects.

Alternative investments

Essentially, investments that are outside the traditional stock, bond, and cash market, such as hedge funds, private equity, venture capital, and infrastructure funds.

Remember, all investments carry some level of risk thus, diversification, working with a financial advisor, and regularly reviewing your investments can help mitigate risk and increase your chances of success.

Overall, Nigeria is a diverse and dynamic market, offering a range of lucrative investment opportunities for both domestic and international investors.