Great to have you here again.
Investment is one of the most thought-as-complicated topics. While investment is simple and you can tailor it to your preference, having the right information is key.
In a series, I will be sharing questions and answers on investment that will provide the right information for you.
Question: How best can I invest in the face of rising inflation in Nigeria?
Answer: Inflation is the general increase in prices and fall in the purchasing value of money. In simple terms, with ₦20,000, you could buy more groceries in Year 2020 than now, in Year 2022. That’s what inflation does to your money. With a not-so-stable currency like the naira, you need to be proactive to counteract the effects of inflation on your investments.
Here are few ways to do this:
- Invest in investment options that offer returns (ROI) that beats the long-run inflation rate. (As at now, the long-run inflation in Nigeria is 12% per annum, hence, your naira investments should provide annual returns that beats this figure or is close to). This helps you stay ahead of the erosion in the purchasing power of your money.
- Invest in a stable currency- A good way to beat inflation is to invest in currencies that are more stable (and have low rate of inflation) e.g., dollars. This preserves the purchasing power of your money. Thankfully, fintech apps (e.g., Rise, Bamboo, Troove and others. A google search will help!) have made investing in dollars and other foreign currencies very easy.
Inflation is not something you can control but you can control the effects on your investments.
See you in the next episode for another insight into investment!
To your financial independence and freedom!