Investment is not a get-rich-quick scheme; it is a process of building wealth. There are active and passive investments. Investment that require your presence and close attention is active e.g. owning/ managing a business while those that do not require your presence are passive.
From the investment pyramid (Click here to read), after putting in place cashflow management, clearly stating out your investment goals, risk assessment and time horizon, the next step is to assess different investment options available. Mind you, investment is not only for those who have tons of money. With as low as N5,000 you can start investing.
There are also short-term (1-3 years) and long-term investments. While long-term investments (e.g. Real-estate) are usually considered the best, they most often require huge capital, however, do not despair, you can grow your capital to that stage using short term investing. These ones mostly require low capital.
For those who are actively working to generate earned income, the key is to allocate a part of your income to investment. Even if it looks meagre compared to your long-term goals, remember, the key is consistency and patience.
In this article, I’ll be addressing some short-term investment options available in Nigeria.
Fixed deposits: These are financial instruments provided by banks or non-bank financial institutions which runs for a pre-defined tenor and offers attractive interest rates. Interest rate are clearly stated out so you know how much you will receive at maturity. At maturity, investment can be renewed or liquidated. It is also very easy to access and they are secured.
How can one access fixed deposit?
Commercial Banks: Examples include Zenith Bank, UBA, First Bank, Unity Bank etc. Most banks require a minimum of N100,000 and interest rate is based on tenor usually ≤10%. They also have a minimum holding period of 30 days.
Investment Deposits: They are similar to bank fixed deposits but usually offer more attractive interest rates mostly between 12- 20%. They require a minimum of N200,000- N500,000 and have a higher minimum holding period e.g. 120days. Institutions that offer this product include Microfinance Banks (e.g. Asset Matrix Microfinance Bank), Consumer Finance Institutions (e.g. X3 Leasing Limited)
Treasury Bills: These are short-term securities issued by the federal government through the Central Bank of Nigeria to provide short-term funding to the government. They yield no interest but are sold at a discounted price of the per value such that the discount is taken as the interest on investment. For example, if the treasury bill is worth N200,000, it will be sold at N180,000 (discount of 10%). The discount of N20,000 will serve as interest while at the end of the tenor, you will be paid your N180,000
Treasury bills are sold by commercial banks. You have the option of receiving your interest upfront or at the redemption date with your capital. The interest rate (≥10%) also depends on the tenor and capital base.
Stay glued for other investment options in Nigeria.
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Investment Options in Nigeria
@onlinewealthempire, you can get an avearge rate of 5.5% p.a for fixed deposit in Nigerian banks with N100,000. However, considering your capiatl size, you can check out other options like mutual funds or treasury bills.
Firstly thanks for this information. Please I will like to know the fixed deposit interest you will get with 100k from Nigeria 🇳🇬 banks