Connect with us

Investment Tips

Guaranteed return

I want to address the issue of guaranteed returns, with a view to using that as a way to gauge offers in general.



MSME's, Development plan, Guaranteed return

There are so many offers floating around the financial services space – farms that grow seasonal crops are offering a guaranteed fixed return, companies trading in the currency markets with huge per second swings are offering guaranteed profits, online equity trading apps are offering guaranteed returns to investors, etc.

I want to address the issue of guaranteed returns, with a view to using that as a way to gauge offers in general.

First off, what is a guarantee? According to the Merriam-Webster dictionary, a guarantee is “an assurance for the fulfilment of a condition.” Thus, a guarantee “assures.”

What is a financial guarantee?

Simply put, it’s an assurance of a financial condition, usually a gain or protection from principal loss. For instance, a Guaranteed Investment Contract, “Guarantees or assures the owner a specific rate of return from an insurance company in exchange for a deposit.” A Guaranteed Investment Fund “allows its client to invest in equity, bond and/or index fund while providing a promise of a predefined minimum value of the fund (usually, the initial investment amount) [which] will be available at the fund’s maturity or when the client dies.” A financial guarantee is simply a non-callable promise to investors that stated principal and interest payments will be made.

GTBank 728 x 90

When the phrase, “Guaranteed Returns” is used, the issuer of the investment promise is saying and giving an assurance that come what may, the promise made on returns (and principal) will be met. This is a promise, it’s not callable, reversable or negotiable.

[READ MORE: INSIGHT: Understanding estate planning, asset protection, and asset transfer]

How do guarantees work in practice?

Well, there are basically only two types of investment products, Fixed Income for investments that offer fixed returns and Variable Income for investments that offer variable rates of return.

Coronation ads

Fixed income products include bonds and mortgage securities issued by sovereigns or the private sector. All fixed income products offer an implicit yield when issued and investors are buying these securities to protect invested principal and earn a return. Fixed Income products usually have a sinking fund which is a separate account, usually managed by a trustee company, that receives regular payment from the issuing company. There contributions are pooled during the tenor of the bond and used to repay bondholder.

When investing in a fixed income product like a bond, especially issued by the private sector, the investors must ask:

  • Is the bond “floating” or secured with assets?
  • Is there a sinking fund set up to pool funds to repay bondholders?
  • Is the sinking fund independently managed?

You want to get a solid “Yes” on all three.

What about bank-issued products?

When you deposit money in a bank, it’s insured up to N500,000.00 by the Nigerian Deposit Insurance Corporation (NDIC). So we can argue that the risk-free deposit level for any Nigerian bank is N500,000.

The NDIC does not cover all investments in the financial sector; investments in Discount Houses, Finance Companies, Investment Firms, Unit Trusts/Mutual Funds and insurance companies are not NDIC insured. This means you should do a lot more due diligence with investments issued by these firms.

Jaiz bank ads

Variable income products are investments whose returns are not fixed or whose implied yield cannot be determined at purchase. Equity-based investments are examples of variable return products when you buy a share of MTN, you cannot determine with any certitude the return on your investment in 12 months; keep in mind that “past results of any stock of fund is not a guarantee of future returns.” Simply put, equity prices and returns are based on projected cash flows and earnings in the future. Because no one can predict the future, it follows then that no one can guarantee returns.

Stanbic IBTC

Let me be specific with two commodities I have seen over and over being packaged as “investments” i.e.,  Currencies and cryptocurrencies. The price of these commodities are based simply on demand and supply, nothing more. If more people buy, prices will rise, if demand falls, prices fall. These commodities have no intrinsic value, currencies are based on the full faith and value of the issuing government. No one can project demand, but anyone can gamble and take a position on expected rise and fall of demand. No matter how these products are marketed to you, once it involves trading in cryptocurrencies and currencies, you are essentially gambling. With gambling, there are no guarantees.  I’m not suggesting that they are illegal, gambling is legal, I am asking you the investor to be aware of this, and take enough risk management procedures.

When you as an investor get an offer, and the vendor offers you a guaranteed return, what questions should you ask?

  • Is the firm registered with Corporate Affairs and the Securities & Exchange Commission? You want to know if the owners have been vetted. If they have share capital, and if are playing by regulated rules. But go further.
  • How is that guarantee being funded? If a farm promises you 20% from the sale of maize in the future, how do they guarantee that 20%, if the crops fail? Do they have a sinking fund? Is your guarantee in writing, with unambiguous language that guarantees a return to you at a set date and set return rate?
  • Is the guarantee backed by any third party? The farm has a bank that receives sales proceeds; can the farm get its bankers to issue a bank guarantee on that written promise to pay you, the investor, 20%? Ask questions…

[READ ALSO: If you experience these signs then know your salary is not enough]

Essentially, remember this

Gambling simply means volatility. If you have the risk-free rate at 12% to 14% via Federal Government Bonds and you receive a “guaranteed” return of 15% a month i.e., 180% a year from a product that trades in cryptocurrencies or currencies, understand that what is being offered is not an investment at all, but a trip to the casino – no difference.



  1. Olu

    November 13, 2019 at 9:43 pm

    Ha !!

  2. L

    November 14, 2019 at 1:37 pm

    Very insightful.


  3. Fidelis

    November 17, 2019 at 12:29 am

    I don’t see any agric investement product offering guaranteed return on investement, what they offer is guarantee return of capital which is what is insured by their insurance companies. So I’ll advice you don’t put funds with any product without a capital insurance from a recognised insurance company.

  4. Oluwafemi B. Onojobi

    November 26, 2019 at 6:05 pm

    Nairametrics thank you for this write-up. Any reader of this article would have their eyes opened and cleared from parkaged deception.

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Investment Tips

Retail franchise investment next gold mine for Nigerian investors- CIG

Retail franchise investment curbs unemployment  and create buffer for people looking for side hustle



The Choice International Group (CIG) has tasked both unemployed and employed Nigerians to embrace retail franchise investment, as the initiative would curb unemployment in the nation  and create buffer for people looking for side hustle.

In line with a recent FBDS Study, there are over 450,000 Nigerian career professionals with minimum investible funds of N1 million, looking out for investment opportunities.

In the majority, these funds are looking for franchise type opportunities for ease of venturing and minimal failure risk.

As far as CIG chairperson, Diana Chen, is concerned, such investor should look no further but consider the group’s retail franchise investment opportunity, which offers Nigerian community mouth-watering offer of owning Gree & Lontor retail stores.

According to him, Gree is the world’s residential air-conditioner manufacturer, while Lontor provides high-quality, energy-saving and convenient rechargeable home appliances and lighting products for global consumers.

GTBank 728 x 90

He said, “Both brands have been built by the CIG into a world-class electronic retail chain in Nigeria opening no less than 20 brand shops in Lagos and Oyo over the last 18 months.

“The sales performance of its existing stores in the country makes Gree & Lontor one of the most profitable businesses in Nigeria with yields of an average return on investment of 50% and above per annum.

“CIG is offering investors the opportunity to own any of six regional logistics centres, or any number of Gree & Lontor brand shops in viable locations across Nigeria.

Coronation ads

“It is the decision of the company to open up these opportunities to the investing public through a Franchise Retail partnership.”


He added that the company has mapped out two investment models it says are simple, transparent, and hassle-free.

“The first model involves only six regional logistics centres located across the geopolitical zones in Nigeria.

“Whoever invests in this will require a capital outlay of $1 million, and become a mega distributor partner of the Gree & Lontor brand, and service a network of brand shops.

Jaiz bank ads

“The second investment model involves the Gree & Lontor brand shops – retail franchise stores that require an initial capital outlay of N20 million.

Stanbic IBTC

“The investor will secure a store size of 120-150sqm at any choice location, shopping mall, plazas, high streets and even residential neighbourhoods.”

What they are saying

Nigeria is a growth market for franchising and franchise development services.

Gbenga Ajayi, an Entrepreneurship analyst, said, “The retail industry comes second to the food industry among sectors with best franchising opportunities.

“As with other emerging markets, one of the challenges of franchising in Nigeria remains the strengthening of intellectual-property regimes so that franchise companies can transmit knowledge and franchise system concepts with the confidence that such know-how will be protected.

Continue Reading

Investment Tips

Where to invest N500,000 right now

Nairametrics interviewed financial experts on what assets they would invest in if they had N500, 000



Since a full economic recovery this year is off the table, Nairametrics interviewed some investment experts, entrepreneurs, and corporate heads, on the assets they would invest N500,000 in. The responses varied from buying gold to investing in mutual funds or starting a business.

The world economy is projected to fall by 4.4% in 2020, an upward guide from an earlier predicted rate of -4.9% made in June. The IMF projected that social distancing due to the COVID-19 pandemic will linger till 2021, but the transmission of the virus will plunge globally by the end of 2022.

READ: BUA Cement shows resilience to marginally improve bottom line

Temitope Busari, CFA

With fixed income yields at the current levels, my N500k in today’s market will go into a dividend-paying stock or alternative investments.

GTBank 728 x 90
  • Depending on whether or not I can afford to risk some capital and barring timing constraints, I would buy a stock that offers periodic cashflow in form of dividends.
  • For alternative investments, I would explore high-yielding fixed deposits in the on-lending space.

READ: Thrive Agric: “Where is my money?”

Michael Nwakalor, Macroeconomist at CardinalStone Research

  • The yields in the fixed income markets are currently on the low and producing negative real returns, the equities market provides a viable alternative to earn a total return above inflation.

(READ MORE: Trading and Investment for beginners: How to prepare for the stock market)

Coronation ads
  • I like stocks in the banking sector, as a number of them remain undervalued by fundamental metrics. Several names are on the course to post near double-digit dividend returns by the year-end. A portfolio that includes the following counters – GUARANTY, STANBIC, ETI, FBNH, and ZENITH, should provide adequate exposure to the sector as well.

READ: Onyema, Oniha highlight opportunities for investors in fixed income market

Adaobi Okonkwo, Currency Trader of a leading Tier 1 Bank

  • With a few things to invest in, the most reliable investment that comes to mind is a mutual fund. The fixed income and money markets are currently experiencing a downturn; hence, investing in them could reduce my income spread.
  • However, with a mutual fund, my portfolio of investment in the capital markets is determined by the fund managers with a decent return on investments certainly above the risk-free rate. Gold is a commodity that would yield a good ROI within a specified time frame if I wanted to invest by myself.

READ: FG to inject over N198 billion on capital projects in power sector in 2021

Silas OZOYA, President/CEO, SUBA Capital

Though quite a small capital, it might not do much if you want to play the long-term investment game. However, it can set the ball rolling.

Jaiz bank ads
  • I would invest it in a high yield investment platform that pays at least 5% returns monthly to cover running costs.
  • Put the money in a fixed deposit and leverage it as collateral to take a debt fund, with a 6 – 12 months moratorium from a commercial bank for a possible expansion of a profitable business. This way, you gain on the debt and still have your N500,000 intact.

(READ MORE:Nigeria’s Macro-economic dashboard for Q3 2020 – Comercio Partners)

Stanbic IBTC

Ugonna Thelma Ohiri-Anyanwu, CFA

With a gift of N500,000, my risk appetite and drive for higher returns,

  • I would invest 50% of the funds (N250,000) on dollar and Eurobonds. This is mainly because of my future needs for FX and also as the need to hedge my currency risk.
  • I would invest 25% of the balance (N125,000) in Ethereum, which would give me a steady cash flow with medium risk.
  • The balance of N125,000 would be invested in Value company shares with low P/E and also stable dividend payments.

READ: CBN reveals framework for the N75 billion Youth Investment Fund

The overall investment portfolio allows for diversification, stable cash flow in both local and FX currency, and currency hedge. These would provide a solid mix between ownership of materially underpriced assets and high dividend-yielding assets.

Bottom line

Amid the rising COVID-19 caseloads prevailing globally, the financial experts interviewed above showed significant diversity on the assets they would invest in, coupled with their different appetite for taking risk reflected on their preferred choices made amid a blurry global economy era.

Continue Reading

Investment Tips

Where to invest $10,000 right now

Entrepreneurs, financial experts and investment analysts suggest what sectors or assets to invest in if you have $10,000.



Where to invest $10,000 right now

The upsurge in COVID-19 cases around the world has kept global investors flocking the world’s safe-haven currency at an exponential rate, the high demand for the greenback is coming on the high geopolitical uncertainty prevailing in today’s financial market.

Also, it’s important to note at the currency market, the U.S dollar remains king. According to the International Standards Organization, 90% of currency trading done globally involves the U.S. dollar, most crypto assets, virtually the most liquid commodities are priced in the U.S dollar not forgetting about 40% of the world’s debt is dominated in the greenback.

READ: If you have N1m today, how would you invest it?

READ: Hackers, expose crypto wallets worth $150 million at Kucoin

So Nairametrics felt it paramount to ask a hedge fund manager,  entrepreneurs, and financial experts, about what sectors or assets they would invest in if they had, say, $10,000.

GTBank 728 x 90

Their responses were revealing and diverse as they were varied—ranging from; buying global equities, local stocks, real estate holdings to investing in digital assets.

READ: Key ‘side-hustles’ Nigerian Bankers supplement their income with

READ: What BBNaija winner, Laycon can do with N30 million  

Coronation ads

Gavin Smith, veteran trader, and managing partner at Panxora Crypto Hedge Funds.

I would scale into BTC $2,000 now, $2,000 when it comes off to $10,000, then add $2,000 at $9,000 and another $2,000 at the $8,000 level. If BTC then breaks above $13,000 I would buy any of the above orders that had not been filled of the remaining $2,000. I would put $500 into each of these four DeFi protocols: LINK, COMP, KNC, and OMG.”

READ: Real Estate Developers express fear over selection process of CBN’s N200 billion Housing Fund

DeFi is an exceptionally volatile market and these would need active management, but they represent an opportunity with exceptional upside potential. This is a market our analysts are building a profile in, to advance our DeFi hedge fund later in the year.

READ: Real Estate: A universal convertible survival tool

Jaiz bank ads

Debo Adejana – Founder, MD/CEO – Realty Point Limited.

Stanbic IBTC

I follow the investment wisdom that says, ‘invest in what you know and understand’. I know and understand real estate probably more than any other investment asset class.

So, the decision as per what I will invest in with $10,000 which should be upwards of N4m is simply; Real Estate. I will either do rental income property as part of a properly organized shared-ownership structure or speculate on land depending on how much time I have with the money. The reasons are very basic, real estate investments have been known to survive and surpass any and every challenge.”

READ: If you had $100,000 in cash, where would you invest it in US markets?

Darlington-Morsi Onyemaka, Co-founder Quba Exchange Forbes Accelerator Cohort ’20.

One of the main pointers to a good investment portfolio is diversified across multiple asset classes which should be according to the investor’s risk appetite. Looking at my long-term investment strategy, real estate fits in perfectly for Ten-thousand dollar investment. My portfolio is already jam-packed with high-risk assets and Real Estate will do a great job at hedging the risk factors without minimizing profitability in any significant way.”

READ: Foreign investment inflow into banking sector falls by 95% in Q2 2020

Francis Obasi Cofounder and CEO of Lead Wallet.

If I have a spare $10,000 right now for investment, first, I’ll invest 55% of the funds into new crypto startups being run by professionals and backed by companies like Coinlist; LID Protocol, and Binance. Second, I’ll invest 20% of the funds into Lead Token as there is still potential for massive growth in the coming months/years. Third, looking at the situation of Nigeria, and not knowing where the current protest (uprising) on #EndSARS is headed, I’ll reserve the rest 25% in USDC/USDT to hold against a potential Naira crash. I’m confident that there is every possibility that the Dollar will become scarce again in the coming weeks/months due to the ongoing protest, thereby returning instant gains for immediate spending on basic needs.”

READ: Ethereum robber transfers $1.5 million worth of Crypto


Dapo-Thomas Opeoluwa Global Markets analyst and an Energy Trader.

“There are so many ways to invest $10,000. The real question depends on the investor. His risk appetite, his investment horizon, when does he or she want to liquidate? The answers to these now limit the options of investments. So for safe and long-term investments, I always advise investing in index funds, Eurobonds or the Nigeria International Debt fund. This is with the caveat that says ‘low risk equals low returns’. Also, I usually would say, invest in investments that beat inflation so you won’t suffer negative real turns.”

READ: Total, GTBank, Zenith Bank up, Bulls return to Nigerian Stock Market

Victoria Njimanze Investment Analyst at a Nigerian Investment Bank

Well, off my head I’ll go with Bonds, cryptocurrency, Stocks, and then alternatives.  I would definitely make my findings first, but I’ll make a larger portion go into Bonds say 40%, 30% in cryptocurrency, 20% in stocks, and 10% in alternatives like commodity market so as to have a diversified portfolio.”

READ: Cryptos: Nigerian financial experts talk risks associated with trading digital assets

READ: A mysterious Bitcoin Whale causes brief panic sell-offs at Bitcoin’s Market

Akinsola Esan, a credit risk analyst at Nigeria’s Tier 1 Bank.

Basically, the goal is to earn substantial returns on investments – dividends, capital appreciation, and secondly, beat inflation in naira which is currently about 12.85%. With $10,000, I’ll spread my investments across foreign equities such as purchasing and holding stocks of companies like Apple, Facebook, Google, Fastly, Nio, Amazon, to list but a few, and also buy some top-performing dollar-denominated Mutual funds such as Vantage dollar funds and some other ones recommended by Nairametrics. Lastly, I will look in the area of cryptocurrencies by investing as much in bitcoin, Ethereum, and other recognized Cryptos. There are some dividend-paying stocks listed on the Nigerian stock exchange as well, I will consider holding a number of them.

Explore Data on the Nairametrics Research Website

Download the Nairametrics News App

Bottom line

Due to the present fickle nature of global financial markets, most financial experts interviewed above are unsurprisingly keen on mostly U.S dollar-dominated financial assets, thus reflecting the greenback’s dominance in demand amid the COVID-19  infection exploding at an alarming rate.

Continue Reading