A whole lot of times, I get questions on investment especially from people who have the intention to grow wealth but do not know how to go about it.
I have listed below five frequently asked questions I get on investment. I have also included my advice on each of these questions. While your money decisions are solely yours to make, I can give some advice to guide you in making the right decisions.
Question 1– I am a student who is interested in investment. I have #5,000. How can I go about it?
My Advice- Awesome that you are having the right intentions; however, there are some factors you should consider when investing. Investing is not like “I have 5,000 and I want to double my money in two months’ time”. Investment is a journey which requires patience and consistency.
Another thing you should note is that you should have a goal of investing. Why are you investing?This makes your investing more intentional and well-planned. Are you investing to generate passive/extra income or you are investing to accumulate capital or any other goal- clearly state it out.
Finally, for a capital of #5,000, I will recommend Mutual Funds. You can start with the Money Market Mutual Funds. Mutual Fund allows investors with similar objectives contribute money into a fund which are managed by professionals in safe short-term instruments with super returns.
Examples of investment firms that offer mutual funds in Nigeria are Investment One Financial Services, Stanbic Ibtc Asset Management Limited, ARM, Greenwich Asset Management Limited, Anchoria Asset Management Limited
Question 2- I want to ask what are the different investments opportunities in Nigeria?
My Advice- Investment options here in Nigeria are broad and diverse. They include treasury bills, mutual funds, investment deposits, Agritech, Microcredit, Stocks, Bonds etc. An understanding of your investment goals, risk appetite and time horizon will guide you to the right option to choose.
Question 3- I am a beginner in investment but I am interested in stock investment. How can I go about it?
My Advice- Great that you want to go on this journey of investment! Do note that Stock Investment comes with a higher level of risk because of the volatility of the market. However, higher risks bring about higher expected returns. Stock investment means buying a part of a company (which is sold in shares/stocks). This makes you a part owner of this company. Stock investing comes with two major benefits – Dividends (what is being paid out to shareholders from the profit the company makes) and Capital Appreciation (the increase in value of the shares you own).
You invest in a company via a stockbroker.
Examples of stockbrokering firms in Nigeria are Anchoria Investment and Securities Limited, Zenith Capital, Meristem Securities, Greenwich Securities, etc. Some of these firms have their e-Trade platforms so you can do everything virtually e.g. ARMStock trade, Meritrade, Afrinvestor etc. You can also check out Fintech Apps like Chaka, Troove etc. Some stockbrokers accept a minimum balance of #10,000 while some require more to trade.
These firms receive commission based on the volume of your trade.
Question 4- I have an investment deposit in ***** Company. I have fears that this crisis can affect the company and my money will be lost. Is there a form of insurance for these companies to protect themselves from such loses?
My Advice- Your fears are not unusual. This is your money and you should feel alarmed if any harm is coming near it. Lol. However, companies like this should be covered by the NDIC- Nigeria Deposit Insurance Corporation. Your principal should be safe to a good extent but, to also provide an additional assurance, you can put a call to your investment officer.
Question 5- I want to understand how investment works? Is it that you give a company your money and from the profit it makes, you get a share of it or how does it work?
My Advice- Okay, let me start with this. Investment is any asset you purchase in which you earn returns/income from this asset or this asset should appreciate in value over time. There are different investment options (refer to Question 2) and it goes beyond giving your money to a company to for business and receiving a share of its profit.
What other investment questions do you have?
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