The late music legend, Fela Anikulapo Kuti in his song ODOO which translates to Overtake Don Overtake Overtake brings home the reality of the average Nigerian salary earner who tries very hard to save his way out of poverty. Fela’s lyrics came to mind a few days ago after claims by an individual that they could live comfortably in Nigeria on a 30K monthly salary. Discussions about this on TwitterNG brought about the question as to how someone could get by on a 30K monthly salary.
Given the haphazard inflation stats in Nigeria over the last 17 years, SEE Nigeria-Inflation rate 2021; unstable oil price – as a country where over 80% of its economic activities depend on crude oil export; as well as the politics around the Naira exchange rate and other factors has ensured the continual depletion in the value of the Naira. Hence the folly in mere stashing money in a savings account. Experts predict that a million Naira in 8 years would have lost so much value to Inflation!
Nonetheless, there might be another way to look at saving; Saving to Invest! Sadly, many Nigerians still believe investment opportunities are reserved for the few privileged class. Far from it though, anyone can start investing irrespective of their level of income. As a matter of fact, the earlier one begins to invest, the better; because the power of compound interest makes all the difference!
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This article however, is going to show you smart ways to invest in Nigeria, in four simple steps.
HOW TO START INVESTING IN NIGERIA
Set aside at least 20% of your monthly income in a fixed deposit account, savings account or recurring deposit account. A smart way to do this is to take advantage of online savings accounts which provide restricted access to funds deposited/recurring deposits within a stipulated period, that could range from a few months to more. They pay interests as high as 10% p.a.
In order to do this successfully, you need to have a sound financial plan to stay debt-free as much as possible, considering how unhealthy it is to start investing while neck-deep in debts. You should have at least three months of emergency savings on hand in case you lose your job or an unforeseen event occurs. After that, focus on your investment goals.
2. Set a realistic goal
Just like every other goal, make sure your investment goals are SMART; Specific, Measurable, Attainable, Realistic, Time-bound.
An example could be to save & invest at least 50K yearly, with a target to grow your wealth by 30% every year. Setting an unrealistic target could result to failure in meeting your goals, which might discourage you from future investments. Importantly, reward yourself each time you reach those targets! A gift perhaps, or a little self-indulging will do.
3. Choose an investment instrument
To begin, pick a strategy based on your investment cash. CLICK HERE to explore our investment options.
Take into consideration the timeline for your investment goal and the amount of risk that makes sense for you. Asides conventional savings instruments like Fixed Deposit or high-interest savings accounts, there are many other investment instruments available for Nigerians such as: Mutual Funds, Gold, Real Estate, Bonds, Stocks, cryptocurrencies, Forex etc. Some are risky while others require a lot of starting capital.
As a beginner, it is best if you begin with low risk portfolios such as mutual funds; CLICK to see; and FGN savings bond. As you dive deeper, and get comfortable with investment, you can explore other higher risk, but high-yield investment options.
When you start investing, you would likely come across many unknown terms and abbreviations, and you would likely become confused and lose patience. Notwithstanding, the smart solution is to learn the concepts of the investment properly so that you don’t get fooled into a bad investment.
Like I mentioned earlier, some investment instruments are riskier than others but may bring higher than expected returns. Your short-term, medium-term and long-term financial objectives should determine how you allocate your investment cash.
Some investment instruments like Forex, Cryptocurrency have grown in popularity but are very high risk investments. To learn about Forex visit the website. They have high trading volume & daily price movements which allows an investor to earn high returns in short time. However, if the market goes against you then you can also lose big too.
On the other hand, some stocks and commodities may not have that high volume & daily movement in comparison to Forex, so the returns could be slower depending on the market movement. The rule is this, if you want to explore any new investment options, learn as much as you can about it before getting in.
To summarize, the smart way to start investing in Nigeria include:
- Have a sound financial plan.
- Set SMART investment goals.
- Choose an investment Instrument.
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