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My mum, who has worked hard all her life and is about to retire after 35 years in active service, is bothered about what to do with the windfall of cash she is about to receive.

Things are about to change, especially when it comes to handling her finances efficiently in such a way as to enable her to keep up with regular expenses. She called me up to discuss this, just like we do on every other major decision.

After weighing all the pros and cons, this is how I have decided to invest her money:

Annuity for Life

An annuity, which can only be purchased from a Life Insurance company, provides a retiree with monthly or quarterly income for life after retirement and is usually guaranteed for a period of 10 years.

The 10-year guaranteed period means that if a retiree dies before its expiration, monthly annuities will continue to be paid for the remaining period up to 10 years, to a designated beneficiary.

[Read Also: A guide to how Mutual Funds work in Nigeria]

The major reason I would be investing a portion of my mum’s money in a life annuity policy is that she will receive a monthly or quarterly income up until the point of death.

Treasury Bills

I would invest a large percentage of her remaining funds in Treasury Bills (mainly 90-day tenors). Due to the short-term maturity profile of T-bills, This would ensure that my mum’s account is always liquid enough to meet her expenses, whilst earning some interest on the principal.

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Dividend Paying Stocks

Stocks are very volatile in nature and as such, a thorough examination would need to be done before committing funds to the stock market, more so for a retiree who needs a constant flow of income to meet basic needs.

Despite the risk associated with the stock market, one cannot ignore the upsides – capital appreciation and dividend income.

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For my mum, I would focus on investing her money in companies that have consistently paid dividends for at least 10 years.


[Read Also: Difference between FGN Savings and Treasury Bills]

Mutual Funds

In Nigeria, the major types of mutual funds are – Equity funds, Fixed Income funds, Money Market funds and Hybrid funds.

I would invest in the hybrid funds which have a mix of equities, bonds and money market instruments handled by professional mutual fund managers who have different skillsets and generate above-average returns on investment. This will enable me diversify her income base and gain exposure to other asset classes which can grow her wealth.

[Read Also: How to invest in treasury bills even if you don’t have N50 million]


In summary, I would go conservative for my mum by investing in the above-mentioned asset classes, which differ from and complement each other in different ways. For example, investing in dividend stocks will help preserve and grow her principal over a long period of time, unlike most annuities and treasury bills. On the flip side annuities and treasury bills offer guaranteed incomes which stocks may not offer if something really drastic occurs in a financial year.


  1. I think this is not a very good plan. As a retiree, you don’t need to spread the little money she gets as gratuity + 50% of pension balance across all investments windows available. I think for her age, she should be well off with a high risk-free investment windows. Bonds, treasury bills, money market mutual fund should suffice. I believe this will generate enough monthly income plus capital preservation and appreciation. I think no equity fund has generated enough as money market except perhaps in 2018. I also think annuity is good but with its income being static, inflation renders it almost insignificant over time.


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