Have you been in a situation whereby you have saved a decent amount of money and you want to make some good investment decisions?
You don’t want to keep the money idle in the bank because it gives you no value in return. At the same time, you don’t want to tie the money down and when emergencies come up you can’t liquidate your funds easily.
While at this, you are wary of inflation eating up the value of your money.
A few weeks ago, Nigeria’s headline inflation rate rose to 22.22% for April 2023, which is the highest rate in 17 years. Inflation and its impact on investments can be a cause for concern, especially for individuals looking to make sound financial decisions in Nigeria. However, despite the challenges posed by high inflation rates, there are still viable investment options that can help preserve and grow your wealth.
In this article, we will explore strategic asset classes in Nigeria today that you can consider investing in, taking into account the prevailing high inflationary environment.
These asset classes are a mix of short-term, mid-term and long-term investment options you can explore to help you plan your finances properly.
High-Interest Savings Account (HISA):
This form of investment is very important, as it serves as a reserve for liquidity purposes.
What it means is that you want to have a certain form of investment that can be easily liquidated to cash (especially in case of emergencies).
You don’t want to keep your money in the bank where it is idle, and also you don’t want to tie down your money in an asset that’s not easy to liquidate. This option also helps you to diversify your portfolio perfectly. Alternatively, saving in local currencies, you can use a fintech app that allows you to save in USD, with this you have a better edge amid the Forex challenge.
PS: HISA falls under the short-term investment option.
Investing in stocks allows you to buy shares of companies that are publicly listed on the stock market. There are attractive shares available on the Nigerian Stock Exchange that you can buy.
You can consider investing in local and foreign stocks, but we must say, before you proceed to buy shares of any company, you must ensure you carry out due diligence to enable you to research profitable companies to buy their shares. This form of investment is good because it allows you to get dividend payments when these companies declare dividends to their shareholders.
PS: Stocks fall under the mid-long-term investment option.
“Land always appreciates”. This is something realtors do talk about regularly and they aren’t lying.
Real Estate is a very profitable and solid form of investment you can delve into. Because as long as humans exist, there would always be a need for land banking. Real Estate has various niches and dimensions. You can invest in residential or commercial real estate.
Unlike HISA and Stocks, Real Estate is really capital intensive and to get a really good offer, you may need to do with millions of naira to invest. But then, even with less than a million naira, you can still make good investments in Real Estate.
How to go about it is by leveraging your network to help you make good investments in Real Estate. Leveraging “crowdfunding” is an ideal way to invest in Real Estate if you don’t have millions of naira available with you.
For example, getting 10 of your very good friends (or people you trust) to pull 100k each would give you N1 million. With N1 million, you now have better leverage to invest in Real Estate. You can buy a plot of land or half plot (depending on the location). Once that investment yields great returns over the years, you would be smiling to the bank.
For example, if the N1m land is now worth N5m after some years, your initial 100k investment is now worth 500k.
“Crowd funding” with friends can be tricky, so ensure you have proper documentation so you don’t have “money dramas” later on.
PS: Real Estate falls under the long-term investment option.
Now, this is one option not many people look at when they want to invest their money, but I can tell you that it’s a great option to have in your asset portfolio. Investing in your business is profitable if you know what you’re doing.
One of the benefits of investing in your business is that it gives you the option of good and steady cash flow. Having an investment that yields consistent cash flow is a great asset to have. This is because (depending on the business) it can begin to yield returns almost immediately after you begin and it also has huge growth potential.
With as low as 100k, you can start a decent business that has great growth potential.
Therefore, Personal Business falls under all forms of investment (short, mid and long-term).
Investing your money in Nigeria can be challenging, especially with the high inflation the country is currently experiencing. However, it’s crucial to make wise investment decisions to ensure your money works for you in the long run.
While making wise investments, ensure you diversify your portfolio adequately to ensure risks are managed properly.