When it comes to investment, you need to understand what to invest in and why you need to invest in it.
Your first step to understanding the vehicle you want to choose, is to engage in quality research. You shouldn’t go into any form of invest blindly. It helps to understand what you would be putting your hard eared income to do.
Good research of these investment vehicles will help you determine what percentage of your capital goes into what and why.
What are these assets categories to invest your money in Nigeria
Buying and selling stocks still remains a good way way to increase or build wealth.
Investors with medium-to-high risk appetites play heavily with this asset. The main factor in this investment vehicle is its price volatility. And this is a risk factor that needs astute management if you want to achieve your desired result.
The capital market has varieties of diverse bonds at every period. And bonds have different coupon rates and prices.
There are a few types of bonds, and each one has different characteristics. They are Federal government bonds, State bonds, Etc.
For bonds, you can have gains on capital when you decide not to hold to maturity. Otherwise, you get your streams of coupons. And get paid your face value upon maturity of the bond. For bonds, you typically get paid coupons bi-annually. The coupon is calculated using the coupon rate and your face value.
For investors that are particular about having a steady income from their investments, this is a go-to asset class for you.
- Mutual Funds
It is basically a pool of funds managed by professionals who have access to a variety of money and capital market instruments. This form of investment does not necessarily require you to do a lot of research. The mutual fund’s managers will do that extensively for you.
All you have to do is invest in the funds and get a steady returns on your money. What you need to pay attention to are management fees and performance of the mutual funds over time.
Make research on the fund managers and get a good idea of the previous performances of the fund in question before you start your investment journey.
- Fixed Deposit
One of the simple investment vehicles in the market is the fixed deposit. Often referred to as term deposits.
It requires you to fix your capital (or funds) with a firm with a predetermined interest rate and maturity date. It’s an easy way to invest. In most cases, it’s relatively safe to some extent.
Low-risk investors usually engage this vehicle the most. And one major factor is that the return may not be significant if you factor econonics parameters especially in a country like Nigeria.
- Real Estate
Landed properties are by far one of the oldest and greatest ways to invest. They are mostly appreciable in this economy. Investing in real estate comes with its own risk.
The most significant of its risk is its liquidity problems. That’s why it is best suited for an investor looking to diversify.
You could explore other angles to real estate investments. They are ‘Buy and sell’ land/properties at a later period, Commercial and residential properties, REITs.
One thing you cannot do without is extensive research if you want to succeed in investing in this asset class.
And finally, it could also be capital intensive.
There you have it!
The goal is to give you a headstart on the best places to start investing your money.
You do not need to be a guru to get started with any of the above-listed assets.