Life can often be challenging for individuals who can barely make ends meet from their earnings, particularly in a difficult environment like Nigeria with high inflation rate and a currency prone to devaluation.
According to a recent World Bank report on the poverty level in Africa’s biggest economy, more than 10 million Nigerians could be pushed into poverty by the economic effects of the COVID-19 crisis alone and with this, the national poverty rate is forecast to jump from 40.1% in 2019 to 45.2% in 2022, implying that 100.9 million Nigerians will be living in poverty by 2022.
Despite this discouraging outlook, wealth can be built from certain time-tested habits and principles such as living below one’s means, regularly putting money away and curbing frivolities.
Going further, once an individual has some spare capital to play with, he/she can start to invest.
Nairametrics interviewed some investment experts, entrepreneurs, and corporate heads, asking for their opinions on what assets they would invest in if they had N100,000. Their responses were as interesting as they were varied – ranging from investing in some financial market instruments to investing in skill acquisition.
Abiodun Keripe MD, Afrinvest Research & Consulting
1) The FGN Savings Bond
The savings bond is issued by the federal government and designed to enable low-income earners to participate in funding government infrastructure development initiatives whilst earning interest. The minimum subscription amount is N5,000 with a multiple of N1,000 in subsequent additions. The bond is issued monthly by the DMO and is available as 2 years bonds and 3 years bonds. As of May 2021, their coupon ranges were between 8% – 9% per annum. These bonds can be purchased through an approved stockbroking firm.
2) Mutual Funds
This is a good option for an investor looking to invest for a short time. These funds are set up to pool together financial resources from low-income earners to invest in asset classes that would otherwise have been unaffordable for this set of investors. These funds allow investors to own a chunk of a larger cake and are managed by a professional fund manager. The funds pay a decent interest above the 90-day Treasury bills rate and are available in regulated asset management firms. An example is the Afrinvest Plutus Fund.
3) High Yield Savings Plan
This is a lot similar to the traditional bank savings, however, it offers higher interest rates than the banks. This product is offered by fintech platforms where you can set a savings plan that allows you to earn more than 8% per annum while your money is working for you. With this plan, you set your savings preference and duration. You also get flexibility in liquidation in case of an emergency. Also, there is no limit to how much you can start with as it goes for as low as N100.
4) Agro-based crowdfunding platforms
This is another viable investment for low-income earners. It offers a higher interest payment above 15% and as high as 40% in some instances. However, it carries a higher risk than the three earlier mentioned. This kind of investment is typically backed by an agribusiness, as such a loss to the business may affect the interest that investors would receive.
Thelma Ugonna Ohiri-Anyanwu, CFA, Banker
If I had a N100,000 right now, being a long-term investor seeking a higher rate in this low-interest rate regime, I would invest a percentage of the fund, with an agrotech company that currently gives decent returns of 15% – 32% for a 3-9 months investment cycle. The balance of the funds will be invested in the stock market as there are currently value companies with good prices resulting from the dip in the market. I would hold these stocks for a minimum of 6 months to 1 year to enable the market to recover from the current dip.
Alternatively, with my future dollar obligations and the current pressure on the naira, I would covert the funds to dollars and invest the dollars in the US stock market using investment fintech apps like Bamboo, Passforlio, etc.
Silas OZOYA Founder/CEO, SUBACapital
For average and low-income earners who are risk conservative or risk-averse and want to invest a N100,000 in a relatively secured investment, my picks would be:
First, Agriculture – While this might seem like an obvious response from me because of my role in that industry sector, investing in agriculture is relatively safe, and sustainable especially when the managers have an active and profitable value chain from production to commodity trade and are invested in staple food (which is in huge shortage at the moment, by the way). So, with a N100,000 portfolio, my first pick would be agriculture.
My other pick would be rental real estate. As shocking as that may currently sound because of the portfolio size, in today’s world, some Fintech applications have made it possible to invest in rental real estate at relatively low entry levels.
So, with this N100,000, a prospective average or low-income earner can leverage these kinds of fintech applications to invest in rental real estate for monthly or quarterly returns given the semi-stable nature of real estate investments as well as the medium risk exposure.
These are my “2 kobo” on what average or low-income earners can invest N100,000 in at this time.
Chinedu Obidiegwu Business Development Lead, Luno Nigeria
The first thought that comes to mind is the single most important investment advice I know; “Invest in what you understand” which is wisdom from the popular book that I recommend, ‘The richest man in Babylon.’
As risk is typically classified into Low, Medium and High, I believe self-investment is important enough to stand on its own. Investing a chunk of money in skill development is my go-to move as this improves future earning potential. It should be mixed with investing in what you understand, as a rule, and I will gladly allocate 40% here.
The remaining can be split into equal 20% ratios of Low, Medium and High-risk ventures. Government-backed instruments, a small side hustle, agency banking, agrotech platforms and Cryptocurrency come to my biased mind. I generally like to make sure I am getting above the inflation rate on any investment. This is not financial advice.
Taiwo Megbope, Head of Equity Research, Co-founder of Investor Hangout
N100,000 now is approximately $200. A 100% ROI is hard to get anywhere and especially for low-income earners – remember that the higher the expected returns, the higher the risk.
My opinion is that the Investor should invest in digital skill acquisition.
The world is in a transitional period now and new technologies are being built every day. Investment in acquiring a digital skill could be one of the best ways to invest $200 (sorry N100,000) today.
Disclaimer: Please note that these are opinions and should not be construed as investment recommendations or financial advice by Nairametrics. Kindly consult your financial adviser for a professional advisory service.