Life can be difficult for people who are barely able to get by on their salaries, especially in a country like Nigeria with a high rate of inflation and a currency that is susceptible to devaluation.
The typical Nigerian is struggling to make ends meet. In 2021, the national minimum pay for federal employees in Nigeria was set at 30,000 Nigerian Naira. The average cost of living in Nigeria was 43.2 thousand Naira per month for an individual and 137.6 thousand Naira per month for a family.
The most surefire approach to accumulating wealth over time is to invest your money. The time has come to put your money to work for you.
You’ll need a fundamental understanding of how to invest your money properly before you put your hard-earned money into an investment vehicle. However, there isn’t a universal solution to this. Whichever strategy works best for you is the greatest approach to investing your money.
You should think about your investing style, your spending limit, and your risk tolerance when determining that.
Nairametrics questioned selected entrepreneurs, and financial professionals to get their advice on what investments they would make with N250,000. Their comments, which range from investing in certain financial market products to investing in skill acquisition, were as interesting as they were diverse.
Debo Adejana, MD/CEO, Realty Point Limited
Hmmm… pre-COVID-19 and the Russia-Ukrain war, N250,000 used to be a decent sum to invest and there could be so many options, especially among other asset classes different from real estate.
Real estate has always been a high-ticket investment asset class. Now, N250,000 is just about $350 and there are very few reliable real estate investments that such an amount can participate in.
I cannot immediately think of any whole real estate investment that can be secured beyond land speculation in currently remote far-flung areas. The other credible real estate investment that sums can achieve are tokenized, unitized, securitized, or fractionalised property investment opportunities where you buy the unit(s) of a whole like in REITS, buying shares in a Real Estate company, joining a cooperative that is focused on investing in real estate, crowdfunding or becoming a co-investor alongside multiple investors in a property transaction, be it a buy & hold, buy & sell Joint Venture development or any of such deals.
As a wise man puts it, knowledge should come before any investment and not after it. When knowledge is ahead, it acts as a shield to the investment but when knowledge is playing catchup with invested funds, monies will fly away.
Tomie Balogun: Certified financial educator, Angel investor, and founder of Twelve
The economic climate is currently defined by inflation due to the after-effects of Covid, disrupted supply chains, and additional factors. Our local economy in Nigeria is grappling with inflation, the advent of political change, and accelerated currency devaluation. These factors put pressure on the income of the everyday person as incomes remain largely stagnant.
Against this backdrop, it might seem difficult to consider investing, however, the principles of investing remain true; we should set aside a percentage of income to work for us so we are not limited to earned income. Earned income is income earned based on time and effort. If we only earn income based on time and effort, our income will always be limited by how much time we can work and the effort we can exert.
The decision on how or where to invest N250,000 (~$357) depends on factors such as the stage of life of the investor, financial goal, risk appetite, financial budget, how often they plan to invest, if they have an emergency fund, etc.
If they don’t have an emergency fund, that’s where to start. Consider placing the funds in low-risk options such as mutual funds. Consider carefully the currency you also choose to save/invest this with.
Got an emergency fund and plan to invest consistently? Consider a split between low-risk options such as mutual funds and medium to higher-risk options such as ETFs on the stock exchange.
Got an emergency fund, and this is all you have to invest? Focus on building up your ability to earn more income short term. That will increase your ability to earn more and invest in more sophisticated investment options which require high minimums.
All in all, investing puts money to work but in an inflationary environment, your money has to work smart. It’s advisable to seek financial advice and get financial education to learn how to get your money to work smart in the current economic climate.
Busola Jeje CFA, Portfolio Manager
If I have N250,000, one of my first options, which is a popular option for conservative investors, will be to buy a money market mutual fund. Nigerian yields have been rising, as evident by the stop rates at the Nigerian T-Bill auction, because of our need to borrow more given the gloomy macroeconomic story. So, money market mutual funds are a great way to capture the gradual upward repricing of interest rates, rather than fixing your money for a very long period of time. There are several money markets funds you can invest on Cowrywise, with top fund managers in the country and attractive double-digit annual rates.
My second option is to ramp up my dollar investments. Nigeria’s central bank is under pressure because of the low supply of dollars in the country. If you understand the laws of demand and supply, the lower the supply of an item, the higher the value. Dollar-based investments are a good way to go. On Cowrywise, offers two-dollar mutual funds where our users invest to hedge a depreciation in the naira.
Finally, for long-term investors, you can allocate some of those 250, 000 naira to foreign stocks. Global markets have taken a beating this year, so you can put some of your capital in stocks at lower prices. If you don’t know much about investing, you can always go for an index fund that is well diversified.
Silas Ozoya, CEO, SUBA Capital
For me, investing right now has become a thing of impact and cash flow… Putting money where it would socially positively affect the lives of people and build a profitable cash flow portfolio.
As interesting as it may sound, food production and processing is one place I would invest an amount like N250,000 because it’s a low-entry business and can easily be locally managed.
Another place I would invest N250,000 would be the logistics business – The COVID lockdown showed us a thing or two about the importance of moving things from one point to another.
These two generate cash flow almost on a daily basis for whoever invests in them.
If I want to move away from business investments I could also invest in high-growth dividend stocks, or stable digital assets. Basically, any asset class that generates cash flow is what would be interesting to me at the moment.
Thelma Ugonna (Ani) Ohiri-Anyanwu, CFA
If given a quarter of a million naira to invest, my main investing aims would be to preserve the value of the money and safeguard them from the effects of additional Naira devaluation, given the current inflation rate of 19.64% and the ongoing depreciation of the Naira.
I would accomplish these two objectives by putting the money in investments that are inflation- and FX-hedged, such as buying commodities like gold directly or through an exchange. I would also take advantage of the high yields and benefit from the strengthening of the dollar by investing in Euro-bonds and dollar mutual funds.
Michael Chigbufue, ED Treasury, Nathan Finance
For individuals looking for another means of income, individuals would need to consider their risk appetite, the time duration the funds would be needed, and a lot of other factors. Banks today know cannot offer high rates owing to the fact inflation is way above the government securities which should be the safest form of Investment. But this still remains the safest Investment in Government securities FGN Bond, treasury bills, and Fixed deposits offered by banks.
Individuals who have a better Risk tolerance level, these individuals can leverage the fact that the rural areas do not have access to banks, POS business can be a source of generating good income, and such individuals can also open a small Restaurant. Another kind of business is to start a distributorship business with a pure water factory. These are essential commodities and would be a daily cash-generating business.
Other lines of business that can be done are listed as follows. Start a Fumigation Business, Laundry and dry-cleaning services, Car wash, corporate cleaning services, Barbing salon, Web design Services, graphics design, and social media branding (If you are IT inclined).
Bottom line
Just as crucial as having a source of income is investing your money. By attaining your financial objectives for the now and the future, wise investments aid in the financial security of your life. You may increase your wealth, develop a second source of income, and get returns that outperform inflation by investing. After retirement, when your normal income quits, it guarantees that you continue to live well.