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Becoming An Investor In Nigeria: Where To Start?

Image; Joran Quinten on Unsplash

There is no limit to investment opportunities in Nigeria.

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.

Nigeria, although might not look like it, boasts of tremendous investment opportunities in its various and vast sectors.

Various reliable investment options range from the Nigerian Stock Exchange down to Agriculture.

Contrary to popular opinion, the investment sector lays out a welcome mat for everyone regardless of financial status or any other defining factors. Investing is not exclusively available for the rich, wealthy, and powerful.

Although there are considerably noticeable red flags raised by Africa’s most populous country, like the presence of national insecurity, lack of proper infrastructures, and volatile government policies amongst other cons, there are advantages that really should not be overlooked.

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.

Regardless of its sector, investing a certain amount of money can be scary for those willing to embark on this financial journey. Gaining knowledge about the sector of your choice not only helps to manage risks properly in the long run but also prevents the incurring of catastrophic losses. 

But how to maintain good balance on the market? 

There are wealthy advisor firms that play big, and the effort to learn how they manage their assets is a helpful thing alone — See the example of Burgundy Asset Management and what they do with their stocks and holdings. This is big-scale, however, to simply begin somewhere, it is better to start with low-risk investments and some best practices than to engage with an advisor straight away. Real-life experience will provide you with practice and will get your literacy in the field to a more advanced level.

Some steps that help you start include:

  1. Draw Up a Financial Plan

Self financial evaluation is the very first step that can help prevent mistakes as 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. Scope the Available market 

Just because a particular market is in trend or poses a possible available opportunity does necessarily mean it will give that high success rate you crave. Before making that decision to pool money in a particular sector, it is always a good idea to know your way around.

Is that Product or Service an Evergreen demand?

An example of this sector is the Real Estate sector. Thanks to the ever-increasing Nigerian population, real estate agencies make for an amazing investment plan.

3. Be Prepared to Invest Long Term

It is important to keep in mind that Nigeria as a country is not a fully developed country. Making a profit might take some time as it might span between thirty and fifty percent as Annual Returns On Investment. 

Assessing all these factors and setting up a plan of action will go a long way in proper risk management.

Choosing a sector to invest in is work that is easier said than done. Each sector has a different set of rules they each play by:

  1. Banking Sector

It is impossible to talk about investment without mentioning the banking sector. This sector generates between ten to fifteen percent interest per annum.

2. Real Estate 

Several Nigerians face accommodation issues. This makes this industry one of the top-tier investment industries in Nigeria. While this sector might provide considerably profitable returns over time, it requires a large capital to get started.

3. Agriculture

The agricultural industry is paramount in the growth of the Nigerian economy. This sector is undoubtedly the largest and busiest sector in Nigeria. This includes direct farming for food or livestock farming. This can be small or large scale.

4. Bonds and Stocks

The federal government is responsible for introducing new investment plans to its citizens. The Federal government bonds usually serve an interest rate of thirteen percent which makes it an often better option compared to private investments. 

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