How to become an investor in Nigeria
Many people find investing in Nigeria to be a terrifying endeavor. This is especially true for young people with low incomes who are just entering the workforce. Saving is difficult enough for many people who are underemployed, let alone investing. However, Nigeria offers a virtually unlimited number of investment prospects.
According to the UNCTAD 2020 World Investment Report, Nigeria received 3.3 billion in FDI in total in 2019, a 48.5 percent decline from the previous year as a result of the nation’s escalating austerity measures. In 2019, the entire stock of FDI was anticipated to be 98.6 billion dollars.
Despite its outward appearance, Nigeria boasts excellent investment prospects across a wide range of industries. The Nigerian Stock Exchange to agriculture are only a few trustworthy investment possibilities. Contrary to popular belief, the investment industry extends a warm welcome to all, irrespective of their financial situation or any other distinguishing characteristics. The wealthy, powerful, and prosperous are not the only people who can invest.
Although the most populous country in Africa raises a number of obvious warning signs, like national instability, inadequate infrastructure, and unstable government policies, among other drawbacks, there are also benefits that should not be disregarded. Nigeria is endowed with undeveloped natural resources that offer significant potential for profit and an ever-growing client base because of its corresponding population growth.
- Begin with a financial goal
The first step in beginning your journey of Nigerian investment is having a goal. Your goal will outline exactly what you hope to gain from investing. The investment path has purpose when goals are set. Do you want N50 million by the age of 40? Would you be interested in owning land in Ibeju Lekki by the age of 35? Or do you simply want to be 30 years old with N10 million in strategic capital or cash in your account?
- Have a financial plan
Performing a financial self-evaluation is the first step in helping an investor avoid mistakes. The most crucial aspect to take into account before entering the world of investments is money. A review of your finances can help you establish how much money you have available for investments, which will help you choose the best industry for investing in. This also includes determining your risk tolerance and financial goals for your investments.
- Do a thorough research
After deciding on a goal, you should conduct some research. Learning about the investing choices available on the Nigerian market is part of the research. Real estate, Treasury Bills, mutual funds, fixed deposits, and equities are a few examples of common investment vehicles. There are various risk-return profiles for these assets. Simply because a market is popular or offers a potential opportunity does not guarantee that it will provide the high success rate you seek. It is always a good idea to be familiar with the area before deciding to pool funds in a particular industry. Is there an ever-growing demand for that Good or Service? Real estate is one industry that fits this description. Real estate agencies are a fantastic investment strategy because of Nigeria’s expanding population.
- Start Saving
Start aggressively saving as soon as you decide which of these investment options best fits your objective. Aggressive saving doesn’t necessarily entail setting aside all of your income. It is to consistently save a certain amount, usually between 10% and 20% of your monthly income. Once you have a particular amount saved up, you can transfer it into whatever investment vehicle you choose in step 3 above.
Read Also: 7 top ways to invest in Africa
- Be Prepared to Invest Long Term
The fact that Nigeria is not a fully developed nation should not be forgotten. Since the annual returns on investment may range from thirty to fifty per cent, making a profit could take some time. A plan of action and thorough assessment of each of these variables are essential for effective risk management.
- Understand your investment
Before you part with your hard-earned cash, be sure you know what you’re investing. The success of your investments will impact your financial situation in the future; therefore, it’s critical to understand the facts before you invest.
Make sure you are aware of the level of risk you are taking, the variables that could impact your investment performance, and how simple it is to withdraw your money if necessary. Take your time and conduct your own research before making an investment. Never make an investment you are unsure of or in a hurry. Some assets are managed by professionals, which can assist you in coordinating your long-term investment objectives.
Putting all of your investment eggs in one basket might be perilous in a world full of uncertainty. You can decrease your reliance on any company’s performance by spreading your money over various businesses, asset classes, and geographical areas. Therefore, even though some of your investments may underperform and lose money, your other investments might not. As a result, many people opt to invest in funds where an investment manager makes the asset selections on their behalf.
- Keep a tab on your investments
It’s a good idea to examine your investments’ performance from time to time. The decisions you made two years ago may not be the ideal ones for you today. Regularly reviewing your investing decisions makes sense, whether you consult with a non-biased financial consultant or do it yourself.
- Evaluate the success of your investments: The attractiveness of some investments you have over others may fluctuate over time because some of your holdings have almost likely outperformed others. Reviewing what you own can also help you stay on top of the total level of risk you’re exposing your money to, as increased risk is by no means a guarantee of higher returns.
- Your immediate personal circumstances may have been altered. Your investment decisions are influenced by a variety of factors, some of which may be specific to your individual circumstances. For instance, if you get a new job that pays more, you might have more money each month to invest and be more willing to take more risks in the hope of bigger prospective returns. The best way to ensure your investments still suit your unique circumstances is to periodically assess where and how you’re investing.
- Your financial goals change over time: What you want to accomplish with your investments can alter over time, whether you’re aiming to maximize your pension fund or build up savings for a specific life event, like making a significant career shift.
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