How to Become an Investor in Nigeria

Nigeria is one of the poorest societies in the world yet it is one of the world’s most economically viable and fertile societies where anyone can easily become millionaires through careful attempts at investments of varying kinds. Although small businesses have folded up operations for diverse unidentified but obvious reasons, other businesses and individuals are thriving and financially growing in Nigeria much thanks to being properly handled, managed, and and informed. How to become an investor in Nigeria is not that easy, still it is if you are wise enough to read through its secrets.

According to the UNCTAD 2020 World Investment Report, FDI flows in Nigeria reached a total of 3.3 billion in 2019, and even that was with a 48.5 percent decrease compared to the former year due to growing austerity in the country. The total FDI stock reached a total estimated 98.6 billion dollars in 2019 and it has since then being increasing in numbers.

Nigeria is a country blessed with untapped natural resources that promise great returns and an ever-increasing customer size due to its synonymous increase in population. These reasons among many others are why you need to pay attention to some of the easy steps to knowing how to become an investor in Nigeria.

How to Become an Investor in Nigeria

In a pathetic situation such as Nigeria finds herself, employing the right economic principles in order to witness massive financial growth in the next few years of your life is one absolutely correct way of reaching success. People do a lot of legitimate things in a bid to making it in life financially. One of those things is making investment which, as a financial dynamite, is capable of opening doors of financial explosion.

There are numerous means and methods to becoming an investor. Studying the following tips on how to become an investor in Nigeria will provide you with the necessary information you will need:

1. Make a Financial Evaluation of Yourself

Self financial evaluation is the very first step that can help prevent mistakes in your journey to becoming an investor. Money is the most important factor to consider before venturing into the investment world. Evaluation of your finances will help determine the amount of money available as investment capital and in turn, help figure the most suitable sector for investment. Figuring out your investment financial goals and your risk tolerance is included here as well.

2. Go into Dividend-Paying Stocks

Investors should choose from the dividend-paying stocks on Nigerian Stock Exchange (NGX) that are less volatile. However, there are only currently 8 stocks on the premium board of NGX that meet these requirements including likes of UBA, FirstBank, Zenith Bank, Dangote Cement, MTN etc. Stock investments under normal conditions requires the investor to analyze the company and keep a regular watch on the price movements. Investment in growth and value stocks may not be ideal for a full-time employed individual. Hence, the selection of such stocks should be done on the basis of dividend-generating ability for long-term perspective.

3. Invest in Banks Through Your Fixed Deposit Account

Many banks in Nigeria allow clients to open a fixed deposit bank account. This account will let you invest a specific sum of money for a known time period at a predefined fixed interest rate. The interest rate offered can be different for each bank in Nigeria and one must check and compare the rates before investing. Different Banks can offer interest rate between 4%-13.88% depending on the term of the deposit. The term of deposit can range from 30 to 360 days.

4. Pump Interest in Real Estate

Real estate investment is considered a low-risk investment with a high investment amount. The limitation to real estate investing is that it requires a large investment amount while the liquidity is much lower than any other capital market. Apart from the huge capital, investors can also earn a profit by renting or leasing the property. The profits are made through buying, selling, renting, leasing the commercial properties or earning interest payments on mortgages on properties, this profit is then equally divided among the investors.

5. Buy Bonds

Bonds are the low-risk investment instruments that are ideal for many investors with a low-risk appetite. They have specific maturity tenure and a predefined rate of interest for anyone who buys them. Bonds issued by the government have the highest ratings as they are backed by tax money.