Financial Literacy
Guide to making money by investing in Nigerian Fixed Deposits
Guide to making money by investing in Nigerian Fixed Deposits
This articles explains investing in Fixed Deposit and how much you can make from it and how it is calculated.
A fixed deposit is an investment with a specific amount invested at an agreed interest rate and tenor. All banks in Nigeria offer this investment opportunity, however the rates you get when you invest in one bank may differ from what you get from another.
Features of a typical fixed deposit investment
- Investment period (tenor) is a minimum of 30 days and a maximum of 360 days.
- The Minimum opening balance for this investment is N100,000.
- If the investment is terminated before maturity the total accrued interest not earned will be forfeited. Meaning only the portion of interest earned in the period that your money was in the bank is what will be paid to you.
- The investment amount can be terminated at the customer’s discretion.
- The interest paid to the depositor is subject to Withholding tax (WHT), which is usually deducted from the interest earned.
Advantages of Fixed Deposit Investment
- Provides a higher rate compared to a Savings deposit.
- Guaranteed returns – The returns from this investment is guaranteed.
- Highly liquid – The money can be terminated to fund short term liquidity needs.
- Flexible in nature – An individual can have several fixed deposit investments with different banks and at different terms.
[Read Also: Fixed Deposits or Treasury Bills, Which Is Better?]
Documents needed to open a fixed deposit
- Filled fixed term deposit form which will be provided by the bank.
- Valid means of identification (National ID, Passport, Driver’s license).
- Utility Bill of Applicant (water rate, tenement, rent receipt).
- Two passport photographs.
- Customer investment advice.
How much you get
- Fixed deposit rates for most Nigerian banks can earn between 7% and 12% depending on how much you have.
- The more money you have available to invest, the higher your return.
- For example, to get up to 12% you might have to invest in millions of naira.
How to Calculate Interest on Fixed Deposit
Fixed deposit investments are usually calculated using simple interest, which means the key elements to take note of include; Principal, tenor and rate.
[Read Also: Difference Between Fixed Deposit and Treasury Bills]
Example 1
If Mr Bello invests N1,000,000 in fixed deposit with a Nigerian bank for a 30 day tenor and the bank offers 7%, how much will he make after 30 days?
Principal – N1,000,000
Rate – 7%
Tenor – 30 days
Step 1: Calculate interest to be earned
= 1,000,000 x 0.07 x 30/365 = 5753.425.
The interest on this investment will be N5753.425.
Step 2: Calculate interest net of withholding tax – This is because banks charge 10% WHT on interest.
WHT = 10% (0.1) x 5753.425 = 575.3425
Net interest = 5,753.425-575.3425 = 5178.082
Step 3: Calculate total amount to be earned at maturity
Total amount at maturity = N1,000,000 (Principal) + N5,178.082 (Net interest) = 1,005,178
Example 2
If Mr Bello decides to increase his investment to N1,500,000 at a higher rate of 9% for a 90 day maturity offered by the bank, what will be his total investment after 90 days?
The same principles will apply;
Step 1: Calculate interest to be earned
= 1,500,000 x 0.09 x 90/365 = 33,287.67.
The interest on this investment will be N33,287.67.
Step 2: Calculate interest net of withholding tax – This is because most banks usually charge 10% WHT on interest.
WHT = 10% (0.1) x 33,287.67 = 3,328.77
Net interest = 33,287.67-3.328.77 = 29,958.90
[Read Also: The Pain and Gain of Money Market Fund Investment]
Step 3: Calculate total amount to be earned at maturity
Total amount at maturity = N1,500,000 (Principal) + N29,958.90 (Net interest) = 1,529,958.90
If you plan to invest in a fixed deposit, it will be wise to contact between 3-5 banks and find out which bank offers the most competitive rate before placing your money.
Financial Literacy
How to stay employable amidst massive unemployment
Here are some ways to stay employable amidst massive unemployment.
With the advancement in technology and change in traditional job roles, the workspace is constantly changing. The recent Covid-19 crisis and its consequent economic downturn have rendered many people who were employed jobless, thereby increasing the rate of unemployment. Surviving in an ever-evolving and uncertain labour market, therefore, becomes a great deal of work which requires improved thinking pattern, continued professional development, life-long learning, and the ability to adapt.
Here are some ways to stay employable amidst massive unemployment:
1. Build your expertise
Companies and organizations are looking for individuals with ideas and knowledge that will shape the company’s growth. Learning more about your field will give you an edge over others. It will also enable you to discover new tools and strategies to adopt, that will keep you marketable and make you an attractive hire.
2. Be receptive to change and emerging innovations
Life-long learning is a habit that has to be encouraged if anyone hopes to stay employable. To remain relevant in the workforce, you need to build your competence beyond past qualifications and ideas. Receptiveness to change and emerging innovations will keep you abreast with what is in your career field.
3. Enhance your job-related skills
Landing a job is challenging. It is even more difficult during an economic downturn when companies are laying off workers. One of the strategies to stay marketable is to find ways to improve your job skills. Individuals can learn skills that align with current employability needs by taking up training and courses relevant to their career scope.
4. Be Savvy on Social Media Platforms
The recruitment sector is gradually gaining a presence on social media. Many recruitment agencies take to social media to look for and assess prospective candidates for some job opportunities. Building a strong social media profile and network will help to build relationships with peers and potential employers. This network will increase your chances of landing a job. Building a network in career fields of interest will keep you abreast of information and opportunities in your career path.
5. Refine your soft skills
As traditional work environments are replaced gradually by remote or virtual workspaces, companies are looking for individuals with soft skills like leadership, managerial competence, creativity, time management, good communication skills, etc. Individuals looking to stay employable have to develop soft skills that will help them remain economically viable. Many organizations do not just want to hire skilled people but also self-regulated and innovative individuals able to carry out tasks independently.
6. Be Confident
Self-confidence will make you more assertive about your skills, knowledge, and abilities. Confident individuals can communicate their ideas more eloquently and convincingly. This personality will make them stand out and portray them as relevant hands needed in any organization.
Staying employable in today’s ever-changing and competitive work environment is a process of evaluation, learning, and adaptation.
Financial Literacy
7 ways to earn in dollars while living in Nigeria
Here are a few ways you can earn in dollars while living in Nigeria.
Living in Nigeria and earning in dollars has become many people’s dream. With the high exchange rate from dollar to naira, a few dollars will change your life for good in Nigeria and make you comfortable.
However, being in Nigeria and earning in dollars doesn’t come easy because you have to know your onions. Here are a few ways you can earn in dollars while living in Nigeria:
1. Freelancing or Remote Full-time Jobs: One of the top ways to earn in dollars or other foreign currencies is by freelancing or working remotely. You can get freelancing gigs as a writer, graphics designer or data analyst on freelancing platforms. You can also apply for full-time remote jobs and work from the comfort of your home in Nigeria while you earn in dollars.
READ: FG states reason for $100 charges, others imposed on Nigerians in diaspora
2. Blogging or Vlogging: If you can write or speak well, then you can also earn foreign currency from clients abroad who are interested in your written or video content. Blogging lets you earn from visits to your blog and advertisements. You should consider vlogging on YouTube and other platforms if you enjoy doing videos and have exciting and educative content to talk about.
3. Virtual Trainer: Teachers are not left out on this list. You can earn in dollars if you enjoy teaching by simply putting courses or tutorials on different platforms online.
READ: U.S Central Bank leader says no rush into crypto dollar
4. Publish E-books: Writing and publishing e-books on Amazon Kindle Direct Publishing or other online platforms is one of the most popular and sure ways to earn dollars while living in Nigeria.
5. Translation: You are worth more than gold in 2021 if you can speak foreign languages because you are exactly what many companies are looking for these days. You can land yourself an excellent freelancing gig or remote job if you speak any language other than English. Your local language also counts in this case because people are looking for you to do some translations.
6. Transcription: You should consider being a transcriptionist and earn some cool dollars if you can pay attention to details and type fast. You could get as much as $15 to $25 an hour for transcribing short audios.
7. App Development: App developers are the ones making most of the dollars if you ask us. Every business owner wants an app for their business both home and abroad, and you will be making cool cash as an app developer if you put yourself out there.
You can also earn in dollars working in Nigeria by learning new skills and selling your crafts online to those who need them abroad. If you are very smart about it, you can grow your wealth right here in Nigeria without setting foot on foreign soil.
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