Let’s not lie to ourselves, It’s like the Nigerian economy is the weapon fashioned against us.

And we don’t want to say it’s prospering o, but…

It is well.

If you’ve been living under a rock – we don’t blame you, rent is quite costly – here are some quick stats to get you off the ground.

In September 2023, a 50kg bag of rice cost ₦40k, now, the same amount of rice costs nearly ₦90k.

The petrol price in August 2023 was around ₦650 per litre, now, it’s closer to ₦1k than ever.

In August 2023, a dollar was equivalent to ₦750, and now it’s just over ₦1650.

How many times can we sigh and shuffle our feet and still do nothing?

As you can see, and most probably feel, things are heating up at an alarming rate.

This is because of the removal of fuel subsidies (among others), insecurity and climate change affecting food production, the floating of the naira, and our oldest foe, corruption.

As a result, the average Nigerian’s spending power is drastically reduced, from transport to food to electricity…

Well, you can see why we were talking about weapons prospering.

Anyway, let’s get on to why we’re here.

We know that there are some problems that an article from us can’t solve – absolutely shocking, we know – but we can at least make it easier for you to look after yourself and your money during these times.

What is investing? 

According to Forbes, the simplest definition of investing is buying something and then selling it at a higher price. Your gain (the difference between what you bought it for and how much you sold it) is called a capital gain.

When your asset – whatever you bought – becomes more valuable, it’s called capital appreciation (because if you sold it, you’d make more money than what you used to buy it – your capital).

Investing can also involve buying assets that produce income, like dividends from stocks or rent from tenants if you own real estate. This is known as income investing. Unlike capital gains, the focus is on holding the asset and receiving income rather than selling it for a profit.

What is an Investment portfolio?

You’ve probably heard this word being thrown around by men in power suits and shiny briefcases, but it’s not that deep.

An investment portfolio is simply a collection of investments that you own. It can include a variety of assets, such as stocks, bonds, mutual funds, Real estate, etc.

The goal of a well-diversified portfolio is to reduce risk and maximise returns. By investing in a variety of assets, you can spread out your risk and potentially earn higher returns than if you invested in a single asset.

That’s not too complicated now, is it?

Why should I invest? 

The short answer is, investing gives you better bang for your buck, your money gains more value than it would have if you just kept it in the bank. 

But, if you need a little more convincing;

• Early start, big rewards: The earlier you start investing, i.e., now, the more time your money has to grow through compound interest. This means your capital can turn into a substantial sum over time. Don’t you want to be rich?

• Beat Nigeria (Inflation): Inflation erodes the value of your money over time. Investing can help your money grow faster than inflation, preserving your purchasing power. Obashata.

• Invest for your retirement: Investing helps you stash away and make returns on money that can sponsor your old age, which is especially important with the way Nigeria is going. It seems like an unnecessarily long-term endeavour, but when you were 15, you felt like your 20s were so far away, and now where are you? Exactly. Start now.

• Achieve your financial goals faster: Whether it’s moving out, starting a business, or saving for retirement, investing can help you reach your financial goals, and even leave you some money for one or two enjoyment. Wink wink.

• Support the Nigerian economy: Investing in Nigerian businesses and assets helps contribute to the growth and development of the Nigerian economy (read more about how you can save Nigeria in our African Youth movements article, look at you being Superman).

Okay, how do I start? 

We are so happy we were able to convince, and not confuse, you to get this far in the article!

Well done, you.

Now, before we show you all the ways you can start competing with Jeff Bezos, here are some very important things to know and consider, because what’s better than investing?

Investing with sense.

So, here are the key components to building a solid investment plan;

• Understanding your financial goals: Knowing what you want to achieve with your investments is crucial. Why are you investing? Saving for retirement, buying a home, funding your child’s education, or building wealth are great reasons. Your reasons might even change, but make sure your eye is always on a ball.

• Assessing your risk tolerance: Determining how comfortable you are with risk is essential. Not all investments guarantee your money will grow, it’s a hard but unavoidable truth. More stable investments are usually smaller and take longer to mature and pay out, while more volatile investments may pay massively and much quicker, but the risk of losing your money is higher. Knowing your mindset regarding risk will help you choose investments that align with your personality and financial situation. (Hint: always start small and stable)

• Diversifying your portfolio: Spreading your investments across different kinds of assets can help reduce risk and improve returns. The point is to stay as safe as you’re comfortable with.

• Regularly reviewing and rebalancing your portfolio: Regularly review your investments and make changes as your financial situation and goals change. Remember that your priorities will shift throughout your life. You’re a human being, dear, not a tree.

 Investor to investor:   This is NOT financial advice. Everything in this article is for information purposes only. Before going ahead with any financial decisions, please seek professional counsel. It may seem like overkill, but a financial advisor can provide personalised guidance and help you make informed investment decisions.

Remember, investing with sense.

But, I don’t have plenty money   

Hush, dear child. When have we ever left you out on the streets to your own devices?

You don’t need a bucket load of cash to start investing, especially when you’re just starting out.

Look at investing as a muscle. You can’t jump into a hundred press-ups daily if you have no exercise background. That’s a recipe for disaster. You’d start with five a day, then build up from there.

That’s essentially what investment is.

So, worry not, there are even investment platforms that allow you to start your journey for as low as ₦5k.

Wherever you are in your financial journey, there is a place for you at the investment table, as long as you want to be there.

This is why we’ll give you ideas on how to start your investment journey, even if Nigeria is squeezing your neck (wallet).

Talk true, we dey bust your brain, abi?

Okay, what can I invest in? 

Disclaimer: The following list is just a brief overview of investment options. There’s a lot more to learn about each type. Use this as a starting point for your own research.

Please, and thank you.

Mutual funds

What are they? 

First off, no, it’s not Ajo.

A mutual fund is like a pool of money from many people. It’s managed by experts who invest this money in things – like stocks – for you. This helps you get a healthy mix of investments, which can be safer than picking just one thing.

Experts manage your money and the risk is shared with others.

When you buy a part of this group, you own a piece of everything they own. If the things they (and now, you) own become more valuable, your investment also becomes more valuable. But if those things lose value, so does your investment.

How are my earnings calculated? 

There are three ways to make money from a mutual fund:

• Dividends and interest: The fund might earn money from the stocks and bonds it owns. This money is then shared with the people who invested in the fund.

• Selling things for a profit: If the fund sells something it bought for more money than it costs, e.g., real estate, it’s called a capital gain. This extra money is also shared with the investors.

• Selling your shares: If the value of the fund goes up, you can sell your shares for more than you paid.

When looking at mutual funds, they often show you the “total return.” This is how much the fund has gone up or down in value over a certain time, including any money it made from dividends, interest, or selling things for a profit.

When do I get my earnings? 

Most funds pay out either once or twice a year, and you can also choose to reinvest your returns if you’re really about that investment life.

What are some mutual funds I can check out?

Cardinal Stone and ARM Investment Managers have some (relatively) stable funds you can check out. They also offer those advisory services we mentioned earlier.

It’s as easy as signing up, providing KYC documentation – BVN, National ID, utility bill – and putting your money down.

Oh, and don’t worry, we have more options for you in the Index…

Real Estate

Real estate investments are quite popular, and for good reason too.

What is real estate?

Real estate here refers to land and any structures built on it. This includes residential, commercial, and even industrial properties and vacant land.

As an asset, it can also be a source of income through rent, taxing the people who build on it, or appreciation in value over time. If you shine your eye and make a good investment, you can turn a profit if you ever decide to sell.

Owning land is actually one of the easiest ways to invest.

Do I need to actually buy land to get into real estate?

Not really.

Of course, it would be great to buy a plot and do whatever with it, but we know that might not be an achievable reality at the moment.

So sorry, dears.

This is why many investment platforms have crowdfunded real estate investment options. It’s similar to Mutual Funding, but this is only for real estate.

How do I get into it then?

Platforms like Piggyvest and Keble allow you to fractionally own real estate for as low as ₦5k and receive returns based on your investment category and option.

This is called Indirect Real Estate Investment. The name is pretty self-explanatory.

Your interest could be paid daily, monthly, quarterly, or at the end of the investment period directly into your Wallet.

Now isn’t that easy?

Equities – stocks and bonds

What are equities?

This is when the world comes together as one to destroy people who willingly drink Maltina and eat eba.

Just kidding, just kidding.

Anyway…

Equities are financial instruments (fancy term for tools used to raise capital or invest money) representing company ownership. When you buy equity, you’re buying a piece of the company.

So, if you invest in Equities, you can impress that babe you like by telling them you’re a part-owner of a company.

Technically, you’re not lying.

There are two main types of equities:

• Stocks: These are the most common type of equity. They represent ownership in a corporation. When you buy a stock, you become a shareholder in the company. An Odogwu, if you will.

• Bonds: Bonds are less of ownership and more of loans that companies or governments take out to get money. When you buy a bond, you’re basically lending them money. In return, they pay you interest.

Equities can offer significant returns over the long term, especially if you invest in companies that perform well – this is why early investors in companies like Paystack and Flutterwave are sitting on piles of cash right now. Equities are also generally liquid, meaning they can be easily bought and sold without much of a fuss.

How much do equities cost?

There is no straight answer to this because many factors influence prices.

• The specific company: Larger, more established companies typically have higher share prices than smaller, newer ones. As the Big Girls in town, you get.

• Market conditions: The overall state of the Nigerian stock market can influence equity prices.

• Sector performance: The performance of the sector in which the company operates can also affect its share price. So, if people no dey buy wood, don’t put your money in a timber company.

However, the price of Nigerian equities on the Nigerian Stock Exchange (NSE) can range from as low as ₦4 to ₦500 and beyond. This is a rough range estimate and things can fluctuate significantly.

How do I enter my company part-owner era?

Relax, dear. First things first.

While stocks offer the greatest growth potential, they also come with significant risk. Stock prices can drop significantly in a short time, so it’s possible to lose money investing in stocks.

Bonds are relatively safer, as they are like loans that pay you interest. If you hold the bond until its maturity date (the end of your contract), you get all your capital back. They’re safer than stocks, so people often use them to balance out their investments and protect against big ups and downs in the market.

Now, investing in equities the traditional way can be long.

In Nigeria, you’ll first need to open a brokerage account with an approved firm and a Central Securities Clearing System (CSCS) account. Once your accounts are set up, deposit money into your brokerage account. Then, you can instruct your broker to buy or sell shares using your Clearing House Number (CHN).

There’s a bit more to it, but that’s the gist.

Is there an easier way to get into equities?

Why, we thought you’d never ask!

Some Nigerian platforms have made it their business to simplify this process for you, and we’re here to introduce you to them.

Bamboo and Trove centre people like you who are just getting into investing and want a slow and steady approach.

You can invest in giant companies locally and internationally, and receive returns on their mobile apps.

And as usual, there’s more where that came from – in our index.

Life no hard o.

 

Nigerian Treasury bills

This is probably the safest way to invest money in Nigeria.

What are Nigerian treasury bills?

Treasury bills, or T-Bills are like short-term loans that the government takes out -Short term meaning they have a specific time limit, usually a year – before they expire and you get your money back. They’re a safe investment because they are issued by Nigeria’s Central Bank and backed by the government.

T-Bills are also sold at a discount from their face value. This means you buy a T-Bill for less than it’s actually worth. For example, a T-Bill with a face value of ₦100,000 might sell for ₦90,000. When the T-Bill matures, you get the full face value (₦100,000). The difference between what you paid and what you received is your profit. You are guaranteed your money back.

Clear? Clear.

Hmm, this sounds too good to be true. What’s the catch?

You really can’t eat your cake and have it, dears.

T-bills usually pay less interest than other (riskier) investments with an annual interest rate of 4% to 18%. The interest you earn on T-bills in Nigeria depends on how much you invest, how long you hold them, and where you buy them.

There is also the tiny matter that the minimum amount the government allows you to invest in T-bills is ₦50 million.

Calm down, calm down.

Thankfully, many commercial banks and Fintechs can help you invest with as little as ₦50,000 (this is for banks, it can be lower for fintechs). They pool money from many customers and invest it together. The interest (also ranging from 4% to 18%) earned is then shared among everyone based on how much they invested.

And even that ₦50k might be too much for some, so, treasury bills are pretty capital-intensive for such low interest rates.

But, hey, at least they’re stable, right?

Where can I buy treasury bills?

Stanbic IBTC bank, I-invest and Zedcrest offer treasury bills for investment.

You’re welcome.

Investing in small businesses

If you’re looking for something a bit closer to home without the middleman of corporate institutions and fintechs, you can directly invest in a small business you believe in.

It can be a friend’s business, a small startup you’ve been seeing online that you really like, or even a corner shop you think is up and coming.

Small businesses often have greater growth potential compared to larger, established corporations, and Investing in small businesses can diversify your portfolio, reducing overall risk.

It’s also really nice to directly invest in businesses that align with your values and make a positive impact on society.

How do I invest in them?

Because it’s not as formal as other investment options, there isn’t one set way to do it. The most direct way is to speak to the owner of the business and discuss what you want with them.

They will most likely even be looking for investors because bootstrapping in this economy can be tough, let’s not lie.

You can find out how they’re doing financially, what the management system is like, and what their growth prospects are – this is called doing your Due Diligence – from speaking to someone in charge and also doing some research of your own if they have an online presence.

Then you can negotiate your investment, including what, when and how you’re going to get your returns.

Please note:

• Small businesses are inherently riskier than larger, more established companies. They may face challenges such as limited resources, competition, and economic downturns, and because they are small saplings surrounded by bigger trees, they might not hold up.

• It can also be difficult to sell your investment in a small business, as there may not be a liquid market (like a proper stock market).

• Small businesses may not have the same level of transparency as larger corporations, making it harder to assess their financial health and growth prospects.

Investing in small businesses can be a rewarding experience, sure. But it’s important to approach it with caution and do your due diligence. If you’re interested in this investment option, you could benefit – greatly – from consulting with a financial advisor or doing thorough research on potential investment opportunities.

 

Look at you, taking charge of your life, considering investments and thinking about your portfolio.

Gosh, they really do grow up so fast.

Life in Nigeria is very unpredictable – after all, snakes, dragons and monkeys have stolen money from the government before – but making good investments is one way to bring some stability into your existence.

Press forward, dear, you’re doing well.

Oh, and as promised…

The Baby Investor Index

That’s all we have for you today, gentle reader.

Apart from money laundering and bunkering, being a Nigerian politician and starting pyramid schemes, honest investing is the next best thing.

(That was a joke, money laundering and pyramid schemes will land you in jail and we will deny you vehemently, thanks.)

Anyway, have we successfully made you believe in the magic of legal long-term money multiplication? Which of the options we spoke about is more appealing to you?

You can do a lot with just ₦5k, so what exactly are you waiting for?

Tell us this – and more – in the comments below.

 

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