Where To Invest Money In Nigeria; Top 10 Investment
Ideas/Platforms: Investments are essential if you want to increase your wealth and keep up with the rate of inflation. Cash loses purchasing power over time as a result of inflation. Therefore, if you haven’t invested in a worthwhile instrument or Business, your monthly salary savings may be losing value every day.
Investing can be extremely lucrative. even if it’s really a tiny sum. You don’t need a sizable sum of money to start investing in Nigeria at the moment. You all have a wide range of ethical financial investment options in Nigeria to grow your wealth. Even though it’s only a few thousand Naira, your investment could increase over time if cumulative earnings increase.
Even if your income will be fixed if you work a full-time job, you won’t have enough free time to invest in the stock market. When selecting an investment tool, it is usually preferable if you can invest both time and money. There are a few investment products, nevertheless, that won’t require a lot of your effort for research and analysis if you’re pressed for time.
Understanding what you invest in and why is essential for effective investing. Doing thorough research is aided by knowing the peculiarities of the asset class you are investing in. You may decide what percentage of your capital goes into what and why by doing a thorough study on various asset classes.
Where To Invest Money In Nigeria (Top 10)
1. Oil and Gas
Nigeria is one of the world’s top oil producers, but the majority of its citizens continue to live in abject poverty, according to a BBC study. That is, however, a topic for another day. The current situation is that legitimately reputable investors are earning millions of dollars every day, and if you take the initiative and invest in Nigeria’s oil and gas sector right away, you might soon join them.
A closer look at the industry reveals that practically everyone can find work there, so regardless of who you are or how much money you have, you can still invest in the sector and make a fortune. The majority of operations take place in the downstream sector, where most of us can afford to invest. The Upstream industry is mostly for large investors and multinational corporations with the resources and knowledge.
Knowing where to invest is necessary before talking about investing; the choice you make next depends on your capabilities. In other words, decide whether you can afford to build a refinery or a kerosene tank by the roadside after reading these paragraphs. You will definitely make good money no matter which strategy you choose.
How to invest in Oil and Gas in Nigeria
The oil and gas sector is the sole foundation of Nigeria’s economy. Both domestic and foreign investors see their money grow when they invest in Nigeria’s petroleum sector. Nigeria is one of the countries that produce the most oil in the world.
Here are a few areas of the petroleum business where investors can profit.
Oil Refinery
The most ambitious and vital component of the downstream industry is the oil refinery. One would take at least two years to build and might cost anything from $5 billion to $500 billion. As you can see, this is not an investment opportunity for those with weak hearts. Refineries require significant financial investment, rigorous physical and environmental planning, and cutting-edge technology. Investors who are willing to fork up a sizable sum of money should consider doing this if they can afford it or if there is any way they can put money together. You will get crude oil in Nigeria, refine it, and sell it locally to millions of retailers and distributors. You will also export your refined product to other African nations and even Europe, where you can earn millions of euros.
Fuel Importation
Here, the big men are tripping over each other to make millions of actual dollars. You too may make money legally by investing in importing. There is now a root for importation from the Niger Republic. Having a Tank Farm or collection of filling stations where the imported product can be stored is one of the key prerequisites for gasoline importation.
Fuel importation is a lucrative industry that also necessitates substantial infrastructure. You would need to have a petroleum depot in order to be able to obtain the importation license and permit. Those who are involved profit from both the selling of their products and government subsidies. You can start off little and still make a lot of money.
Petrol Filling Station
Billions of Naira are being made by thousands of investors each year. It is a very lucrative industry for individuals with the necessary financial funds. I once heard about a man who relied on selling tea locally to make ends meet. Over time, he saved money and constructed his first modest gas station in the neighborhood, and now he owns over ten stations spread out over several states.
Transport of Petroleum
This is the delivery of a service that requires moving petroleum products from one place to another. You only need one tanker to start this lucrative business, and one tanker is all you need. You can grow from a single tanker to a fleet of tanks and a sizable haulage firm.
Kerosene Business
The fact that kerosene can be purchased from NNPC for such a low price is one thing that most people are unaware of. You can get the product from NNPC for N300 per liter and sell it for N700 per liter. Owners of gas stations and other retailers operate in this way. Gaining N300 times 10,000 equals N3,000,000.00 if you lift 10,000 liters at a gain of at least N300 per liter.
2. Agriculture
There are 200 million people in Nigeria, according to estimates. Supporting such a fast-expanding population is therefore one of the most difficult issues. Nigeria is mostly dependent on imports because the population inhibits sufficient food production.
The government of Nigeria reportedly spent $24 billion annually on food imports, according to the minister of agriculture at the time. Governments have tried to restrict food imports ever since the nation gained its freedom. As a result, many advantages have in fact been given. The Bank for Agriculture was founded to help agricultural businesses get funding and support.
Agriculture-related businesses receive special financial support from a number of financial institutions, including the Nigerian Ministry of Finance, and government-initiated agricultural policies like AGRICULTURAL EXTENSION, TECHNOLOGY DEVELOPMENT AND TRANSFER POLICY, AGRICULTURAL CREDIT POLICY, AGRICULTURAL PRODUCT MARKETING POLICY, AGRICULTURAL RESEARCH POLICY, LAND RESOURCES POLICY, and AGRICULTURAL COMMODITY PROCESSING.
One of Nigeria’s most attractive investment opportunities has been in agriculture. Investments in agricultural production can be very successful if they are planned and managed appropriately. Crops, livestock, transportation, farm equipment, and a number of other issues are of major significance.
How to invest in Agriculture in Nigeria
According to Nigerian Investment Promotion Commission, The agricultural sector employs 48% of Nigeria’s workforce and generates 25% of the country’s GDP. Over the past five years, the sector has grown at an average rate of 4%. Along with cattle (1.7%), fisheries (0.5%), and forestry (0.3%), crop production leads the industry, accounting for 22.6% of GDP.
And the sector is open to private participation and investment opportunities abound across the various value chains. The broad categorization of these includes:
Mechanized crop production such as rice, maize, millet, cassava, sugar cane, tomato, and the cash crops such as cocoa, palm kernel, and rubber, among others.
Food processing and preservation across the value chains of the sector
Beef processing and packaging
Fruit juice/canned fruits
Beverages and confectionary
Cash crop processing – cocoa, palm kernel, rubber, among others
The exploitation of timber and wood processing activities
Livestock cultivation – dairy and aquaculture (fisheries) development
Horticulture development.
Agricultural input supplies and machinery.
Water resources development especially for irrigation and flood control infrastructure.
Commodity trading and transportation.
Development and fabrication of appropriate small-scale mechanized technologies for on-farming processing and secondary processing of agricultural produce.
Development of private irrigation facilities.
Production of improved seeds and agrochemicals.
Production of veterinary drug, vaccine, chemical, feeds, and feeds ingredients.
Market Research
3. Real Estate
Investment in real estate is seen as a low-risk, high-return strategy. In Nigeria, historically, long-term real estate price growth has been significant. Investors can benefit from the property by renting it out or leasing it in addition to purchasing and selling it at a greater price.
Real estate investing is constrained by the high initial investment threshold and poor liquidity compared to other capital markets. Finding a buyer and seller of real estate and selling the investment is difficult. With better liquidity and a lower investment threshold, a real estate investment trust (REIT) is a substitute for real estate. In the case of pooled investment, REITs are comparable to mutual funds.
REITs, as opposed to mutual funds, solely invest in commercial real estate assets. Earnings are earned through the purchase, sale, rental, or leasing of commercial properties, as well as through interest earned on mortgage payments for real estate. These profits are then distributed equally among the investors. On NGX, REITs are tradable.
How to invest in Real Estate in Nigeria
One of the main ways where you can Invest Money In Nigeria in order generates consistent income streams is through real estate investment. While real estate investing in Nigeria presents a plethora of chances to increase wealth and financial security, there are many pitfalls that may restrict how much you may earn. It is essential to conduct an extensive study and understand the legal aspects of real estate before you get started in order to prevent making expensive blunders.
Despite the country’s present economic crisis, the real estate industry is currently growing in Nigeria and making people millions of dollars. The most common ways to invest in real estate are listed below.
Real Estate Investment Trusts (REITs)
Real Estate Investment Trusts are unfamiliar to many people in Nigeria (REITs). The Securities and Exchange Commission (SEC) oversees collective investment plans known as real estate investment trusts, or REITs (SEC). These schemes pool the money from investors to buy mortgage loans, income-producing real estate, or a mix of the two.
For those who want to own rental properties but don’t want the effort of managing them, real estate investment groups (REIGs) are the perfect option. Access to financing and a reserve of funds are necessary for investment in REIGs.
A single investor may hold one or more self-contained living units in a REIT, and the investment group takes care of managing each unit on the investor’s behalf, including upkeep, advertising vacancies, and conducting tenant interviews. tenants. The business receives a portion of the monthly fee in return for performing these management duties.
Land/House Flipping
Investing in real estate is buying and selling properties quickly for a profit. It is among the best investments one can make, and the owner needs to put in little to no effort. You are prepared financially and are knowledgeable about land ownership and the purchasing and selling procedure. If you wanted to make hundreds of millions of dollars, you would need a lot of cash, but you could start small by purchasing just one plot and work your way up to purchasing tens of plots and acres, selling them continuously all year long.
Flipping houses involves a lot of real estate expertise, marketing, and restoration. One needs the necessary funds and the ability to supervise repairs when required for house flipping to succeed.
Property Development
Real estate development requires a lot of capital. In this scenario, properties are bought in desirable locations, renovated into opulent apartments, buildings for commerce, etc., and then sold at a very high-profit margin.
For instance, if you invest N300 million in building a home in a prime area, you should anticipate receiving at least N600 million when you sell it. When thinking about property development, a good site is essential.
The Gift of Rental Properties
Land ownership and investing in rental properties are both established traditions. After purchasing a property, you rent it to renters. The upkeep costs of the rental property are your responsibility as the landlord.
For individuals with DIY and restoration abilities and the patience to supervise tenants, investing in rental houses may be a rewarding enterprise. Even while this tactic doesn’t need much money up front, it does need a lot to pay for maintenance and cover the months when it’s empty.
4. Manufacturing Industry
Nigeria is a country that is excessively dependent on imports, even for the smallest of goods. Even for the largest economy in Africa, that is not acceptable enough. Regardless of how the economy is growing, there appears to be a higher need for domestic manufacturing of a variety of products.
There is labor available, cause, It will be profitable to invest in Nigeria’s economy to create jobs and promote growth in the economy. Governments have long pushed in favor of boosting manufacturing development.
In Nigeria, everyday necessities like toothpicks are very crucial. Just a few examples of essential items to manufacture are food, water (tables or sachets), fiber wires, telephone tools, car tyres, and even fabrics.
How to invest in Manufacturing sectors in Nigeria
Investors have been urged to direct their money toward the manufacturing sector, particularly the agro-processing, pharmaceutical, and renewable energy businesses. These sectors, according to experts, are lucrative niches that will provide investors with the needed returns.
According to Nairametrics, the suggestion was provided by the Nigerian Economic Summit Group (NESG) in its Sectoral Reforms and Investments in Nigeria Report.
Nigeria, namely its manufacturing sector, provides several favorable circumstances for investment, according to the group. Large arable land, a strategic location in Africa, a sizable market, and prospects provided by the AfCFTA are just a few of the requirements highlighted.
Regions of investment
The research identifies specific agricultural sectors to invest in, including the Wheat value chain, Maize value chain, Sorghum value chain, Poultry value chain, Pig value chain, Cassava value chain, Rice value chain, and Renewable energy value chain.
Pharmaceuticals and oil refining are also on the list since Nigeria offers tremendous investment opportunities in these industries.
5. Equities
Stock trading may be a terrific way to develop or increase wealth. Investors with moderate to high-risk appetites engage in extensive trading in this asset. To get the intended outcome, the risk component of its price volatility must be managed carefully.
Equities are tested strategies for capital growth and dividend income (for dividend-paying shares). The ability to perform both fundamental and technical research is one of the best ways to invest in this sector. These evaluations aid in choosing which stock to purchase and when. Additionally, when to sell certain stocks.
How to invest in Nigeria’s Equities
You need a stockbroker who will handle your trade on your behalf if you want to purchase shares that are listed on the Nigerian Exchange Group. Different brokers provide their clients with varying price structures, support, and financial advice.
Select a chosen brokerage after doing some research
A stockbroker is a designated agent with the power to carry out purchase or sell orders on behalf of investors. In terms of the Nigerian stock market, a broker-dealer business that is a dealing member of the NSE and is registered with the SEC is referred to as a stockbroker. Important things to think about when choosing a stockbroker are their accessibility, cost (because some companies require a minimum deposit to create an account), integrity/reputation, and status (active or inactive) with the NSE/SEC.
Sign up with the stockbroker of your choice
Customers must complete the broker’s registration form (either manually or online) and supply the KYC (know your customer) documentation listed below in order to register with a stockbroker.
• Identification documents (PVC, national identification card, driver’s license, or international passport);
• Evidence of a home address (bill or receipt no later than 3 months),
• A photograph and electronic signature from a passport (if filling out the form online).
For non-Nigerian citizens, a notarized form of identification and proof of address would be needed.
Create a deposit and begin trading
Your stockbroker will give you the information for their bank account, and as soon as any payment you make is confirmed, they will fund your account. Your stockbroker completes all transactions with the exchange. One of two things may take place in this.
a. You can mail your broker trading instructions; this is the typical method.
b. Online trading platforms are offered by some brokers, enabling you to carry out trades on your own.
6. Bonds
For many investors with a modest stomach for risk, bonds are the ideal low-risk investing tool. Both the government and companies issue them to raise money. Each bond has a set maturity period and an agreed-upon interest rate. Each bond carries the possibility of default, which occurs when the issuer is unable to make the guaranteed payment on schedule. The bond’s credit ratings affect the default risk.
The highest values are given to government-issued bonds because they are backed by taxpayer funds. FGN bonds are an example of a government bond. As a result, these bonds will probably have the lowest interest rate. Bonds with poorer credit ratings are probably going to have higher interest rates.
The risk of inflation also applies to bond investments. Government-issued bonds frequently have returns that are lower than inflation, which could reduce the investment’s value. On NGX, you can trade both corporate and government bonds.
How to invest in FGN Bonds
The main purchasers of fixed-income instruments are those with low-risk profiles investing. This is because the danger of default is quite minimal, yet recently the market has seen a low-interest rate environment. Treasury Bills, FGN Bonds, Open Market Operation Bills, and other fixed-income investments used to be a shelter for Nigerian banks looking to increase their bottom line. Interest-bearing assets have been doing poorly lately.
Where can I purchase federal government bonds? A debt management organization, or DMO short, is used by the government when issuing bonds. If for whatever reason, however, interested investors wish to purchase government security, it is easily accessible on the secondary market.
Primary Debt Market
The DMO conducts an exercise for FGN Bonds Auctions every month. Bids for oneself and on behalf of one’s clients must be submitted at the Auctions by Primary Dealer Market Makers (PDMMs), who have been appointed by the DMO.
Secondary Debt Market
On the floor of The Nigeria Securities Exchange (NSE) and on FMDQ OTC Securities Exchange, licensed broker-dealers (banks and stockbrokers) conduct daily trading in FGN Bonds in the secondary debt market. For FGN Bonds, the PDMMs are required to offer a two-way quote. This implies that you are free to acquire or sell FGN Bonds anytime you see fit.
Primary Dealer Market Makers (PDMMs) are who? Banks designated by the DMO to serve as approved dealers in FGN bonds are known as PDMMs. They primarily take on, market, and distribute the FGN Bonds’ Primary Issues.
READ MORE: Top 10 Ways To Invest In Gold: A Guide for Investors
7. Mutual Funds
Mutual funds are pooled investment vehicles where an experienced fund manager manages your investment in accordance with the fund’s aim. The Asset Under Management (AUM) is the total of all investments made by different investors, and it is comprised of their individual investment amounts.
The AUM is then invested in the appropriate capital markets, such as equities, bonds, commodities, etc.
Because you don’t have to analyze the markets or keep an eye on prices, mutual funds are quite useful for people in Nigeria who have full-time jobs.
While it is important to look at the past performance of the mutual funds you are considering investing in, you should only do so for those that have done the best over the previous ten years. You should also read the prospectus of each fund to learn more about the assets, conditions, and risks they are investing in.
You can compare the returns and hazards of different funds online on financial websites, or you can consult a certified investment counselor about this. Investors can make recurring or lump sum investments after choosing a suitable fund depending on their investment needs and risk tolerance. Before selecting a mutual fund, one must be aware of its goal, portfolio, and approach.
How to invest in Mutual Funds
A smart method to diversify your financial portfolio and get a passive income is by investing in mutual funds. However, you can only get the best experience by working with the best in the business.
How to Invest in Mutual Funds in 5 Easy Steps
Know your risk tolerance and risk capacity. Risk profiling is the process of determining the level of risk you are willing to accept.
Asset allocation is the following phase. After determining your risk tolerance, you should try to allocate your funds among different asset classes. In order to balance the risks, your asset allocation should ideally include both debt and equity vehicles.
The next step is to determine which funds are invested in each asset class. Based on investment objectives and past performance, you may contrast mutual funds.
Select the mutual fund schemes in which you will invest, then submit an online or offline application.
To guarantee that you get the most out of your investment, follow-ups and investment diversification are crucial.
8. Fixed/Term Deposit Bank Accounts
Another means where you can invest your money in Nigeria is through the bank Fixed deposit. This is a risk-free and secure way to invest money in Nigeria. If you have a sizeable sum of money that you won’t need for a long, you can invest it in a bank or other financial organization and make a good profit. This is heavily utilized by politicians.
The longer you fix your money, the larger the gain. Just inform the bank that you want to open a fixed deposit account. The process will be adhered to. As the money increases, just go home, relax, and keep on with your usual activities.
How to invest in Term Bank Deposit in Nigeria
What exactly are fixed deposits then? A considerable sum of money placed in a bank for a certain period of time in exchange for interest that accrues after the initial investment is known as a fixed deposit. See below how to invest in one.
Need to have a current account with the bank.
There is a minimum amount required for the investment – typically about N100,000.
It’s usually a 30-day minimum investment requirement.
The investment can be withdrawn or terminated at any time.
If the investment is withdrawn before the maturity date, only the interest accrued within the timeframe of the investment will be paid out.
Interest is subjected to WHT (Withholding Tax) at the time of withdrawal.
Similar to opening a regular savings account, opening a fixed-income bank account has a term period before which the deposit cannot be canceled or a portion of the interest would be forfeited. Prior to opening a fixed- or tenured-deposit account, investors must carefully review the time frame, interest rate, and all other terms.
9. Treasury Bills
Regardless of the amount invested, Treasury Bills are one of the most popular investment programs in Nigeria. In this proposal, the federal government is providing short-term debt instruments. Despite being backed by the federal government, treasury bills are in fact the most liquid money market investments.
They are typically issued for a specified number of days at the basic market auction; this could be 91, 182, or 364. And the Central Bank of Nigeria sponsors it, which normally occurs every two weeks (CBN). The interest rate, also known as the stop rate at the market auction, is not fixed and often varies based on the level of demand and the amount of funding offered by the higher bank.
For example, if a Treasury bill provides a 10% annual rate and an investor wants to invest N100,000, the investor only pays N90,000 from the day of investment but receives N100,000 back at maturity. The N90,000 initial investment is referred to as the discount value, while the N100,000, the maturity value is referred to as the face value
The correct yield is the N10,000 interest received divided by the N90,000 actually paid because interest is paid ahead. That is N10,000 divided by N90,000 or 11.11 percent. However, this is larger than the annual percentage rate of 10%. When investors hold to maturity, they receive the full True Yield.
In general, if you must invest, act sensibly and carefully. Treasury Bills are a good investment and are tax-free and frequently offer higher yields than fixed deposits. This security investment is so aesthetically pleasing.
How to invest in Treasury Bills in Nigeria
Financial organizations (banks or stockbrokers) are in charge of Treasury Bills. It is necessary to fill out a form with your personal information, the amount you are willing to invest, and your bid rate in order to invest in Treasury Bills. Most of the time, the dealer determines the minimum number of Treasury Bills you can purchase.
What are the benefits of Investing in Nigerian Treasury Bills?
It is a risk-free investment.
They are very liquid, which means you can easily convert them to cash easily and quickly
Interest earned is tax-free.
One can use treasury bills as collateral for loans
Excellent investment opportunities for disposable income
10. Fintech
African fintech raised up to $1.4 billion between January and September 2021, indicating an increase in investor interest in the continent’s expanding fintech market, with Nigeria taking the lead. Paystack and Flutterwave’s 2016 launch revolutionized Nigeria’s financial industry by making it possible for thousands of other companies to be paid for their goods and services.
Since then, every year has seen an intriguing trend as individuals try to close various alleged gaps in Nigeria’s financial industry. Data provided by Techpoint indicates that in 2021, Nigerian financial companies raised close to $800 million. This was 120% more than what fintech together raised over the previous three years ($360.7 million).
How to invest in Fintech in Nigeria
In emerging markets, fintech adoption is happening more quickly. The number of platforms is exploding, and investment activity is rising. In an effort to keep up with the market’s quick expansion, several governments and authorities from numerous jurisdictions are striving to establish sufficient fintech ecosystems.
Here are some pointers for selecting the best Nigerian fintech startups to invest in:
Make a personal evaluation
You must conduct a personal assessment before investing. This entails making sure you are prepared financially to invest in the startup and are aware of the risk. Additionally, you should have the necessary funds on hand and understand how much of your portfolio has to be set aside for this purpose.
Select the best Fintech businesses to invest with
Which of Nigeria’s numerous Fintech businesses should investors invest in? Make sure the startup has a clear business strategy and answers an issue before taking any action. If not, it is recommended to stay away from investing in them.
Before making an investment in a Fintech firm, you need also take the following into account:
– The good or service being supplied must be distinct from others.
– Does it address a current issue? If so, it is worthwhile to invest in!
Don’t under- or over-invest, invest the right amount
Contrary to mutual funds or equities, where you may purchase as much as you like and still expect to make money, investing in a fintech startup is riskier. When you invest in startups, you should only put down the amount you can afford to lose. This means that if the business fails, your losses will be strictly restricted to the money you invested.
It’s also a good idea to spread out your financial investments in companies. Spread out your investments by making little investments with several businesses at various periods until they become huge successes and offer great returns on their investments rather than placing all of your eggs in one basket and maybe losing everything.
FAQ
What is Investment?
Investment is the commitment of a resource to a long-term increase in value. Investment necessitates the loss of a current resource, such as time, money, or effort. In the world of finance, investing is done in order to profit from the asset being put to use.
It is essential to comprehend what an investment is because, on occasion, it might be challenging to select the appropriate instruments to achieve your financial objectives. You can make the best decisions if you understand the significance of investments in the context of your specific financial circumstances.
You may earn money from investments in one of two ways. One is the possibility of making a profit if you invest in a sellable asset. Second, you will generate income through the accumulation of gains if you invest in a return-generating plan. In this sense, the question “what is an investment” can be answered by stating that investments are all about investing your funds in assets or things that increase in value over time or that will help generate income.
How to Invest in Nigeria’s Oil Sector
The only economic pillar of Nigeria is the oil and gas industry. When foreign and indigenous investors make investments in Nigeria’s petroleum industry, their money increases. One of the countries with the highest global oil production in Nigeria.
The petroleum industry has a number of profitable sectors for investors.
Oil Refinery
Fuel Importation
Petrol Filling Station
Transport of Petroleum
Kerosene Business
Top 10 Investment Platforms in Nigeria
Bamboo
Risevest
Trove
Chipper Cash
Passfolio
Chaka
Afrinvest
Primary Offer App by NGX
I-invest
Payvest by Carbon
SUMMARY
Where To Invest Money In Nigeria (Top 10)
Oil and Gas
Agriculture
Real Estate
Manufacturing Industry
FGN Savings Bond
Equities
Mutual Funds
Fixed/Term Deposit Bank Accounts
Treasury Bills
Fintech
