Investing in Nigeria, and as a Nigerian, is hard.
Yes, let’s get that out of the way first.
You hear about all these juicy US stocks and dive into the NSE only to realise that it is not as easy as they say. Several months later, you’re not raking in the millions you thought you would.
Then, there are these new guys in your backyard with shiny new Macbooks and beautiful cars, promising everyone a robust monthly ROI.
Everywhere you look, there is one investment or the other promising you amazing returns in no time.
This and the fact that everyone is posting daily #RenoNuggets on their WhatsApp stories almost makes it seem like you are the only one that is unserious with your life.
You want to invest, and fast, but you’re not sure what is worth investing in.
Calm down for a minute. Before you invest in anything, know these:
1. Preserve your money first
This is probably one of the most underrated investment hacks out there.
I was having a conversation with my brother a couple of months ago when the words “85% of something is better than 1000% of nothing” tumbled out.
There is a lot of noise about the pros and cons of saving and investing in Nigeria. From the high inflation rate to bank charges, almost everyone encourages you to invest in anything rather than save.
However, it is better to have 85% of your money sitting pretty in a high-yield savings account than to invest it in a ‘ lofty investment package’ and lose all that money.
I personally keep a decent volume of money in other currencies but not as an investment strategy.
It is easier to make USD purchases and payments on sites like ASOS or Canva when you have dollars. This way, you never have to worry about fluctuating exchange rates or limitations on your naira card.
If you have to change from naira to dollar, you feel the weakness of the naira, especially with the fluctuating exchange rates.
A $200 product will most likely remain $200 or fall – but the exchange rate might mean the Naira price goes up. If I had some money in dollars, I can always buy the same product for $200’s worth and not feel the weakness in the naira.
Preservation, not necessarily seeking to grow.
2. Understand what you are investing in
Someone tells you that you can buy a piece of land now and sell it for two or three times the price in about five years.
Another person tells you that they have a forex bot that trades for them and gives them a steady 15% return every month.
That’s great, but you have to ask yourself how it works.
Both statements might be true, but that does not mean that they will be true for you.
Before investing in anything, try to understand exactly how it works.
For example, with real estate, do you just buy any piece of land and let it sit for some time before selling it for 3x the price?
If this is so, why hasn’t everyone in the world become a billionaire?
Investment performance is unpredictable because the market is unpredictable so save yourself some heartache by asking the right questions.
For example, what happens when things go sideways? How do understand what is happening or what to do when you see your portfolio behaving differently?
If you don’t understand it but are interested anyway, find a licensed and regulated body to handle the investment for you.
3. Never go all In
Sometimes, the best people to take advice from are those who have been foolish.
Here’s a confession: I have been gravely foolish before 😢, but that is a story for another day.
No matter how juicy an offer sounds, never go all-in with all of your money.
Investment experts tell you to never invest more than you can afford to lose.
I’m not a fan of losing money at all so I never invest more than 2 – 20% of my total disposable income into any one project.
Even if you want to invest all your disposable income, this model guarantees you 5 – 50 different investment options.
And if you have been following what I’ve been saying so far, there is no way you won’t make a decent ROI on a good chunk of that portfolio.
Learn how to diversify your investment portfolio here.
4. Don’t follow the trend
“I invested because they were all investing”
Even the Oracle of Omaha, with all his billions, advises that you be greedy when others are fearful and you be fearful when others are greedy.
So, why are you following the trend?
The investment market is a tricky thing.
Let’s say there is a commodity that will reach its maximum yield at around point 60. I am not using exact figures because, in investment, nothing is guaranteed.
So, you have some friends who bought in when the yield was at 20 and their portfolio kept growing. But you didn’t. Then the portfolio got close to 50 and more people bought in.
There you are, with your money, seeing everyone investing, and in goes your money.
Now, this is where the damage happens.
Because your friends who bought at 20 have moved about 30 places up, you also want to enjoy that kind of ROI before you pull out. Sorry, you’re only getting a 10 point upward movement before it starts crashing down again.
So, does this mean you shouldn’t get into trends at all? Not all the time.
It means that you should refer to my second point again – Understand what you are investing in.
Doing this will help you know how viable the investment is and keep you from going all out and taking huge hits.
5. Develop yourself, it’s an investment too
Besides preserving your wealth, what’s the other purpose of investing?
I heard someone at the back say ‘growing your money,’ and that is right.
Instead of putting that ‘small money’ that you have into someone else’s hands, find a way to improve yourself with it.
Using myself as an example, I began my freelancing career handling bulk content requests.
Then, I slowly developed to writing niche articles and found that I could charge more for those.
Along the line, I did some SEO training and loved it. I continued building my SEO knowledge and today, I can charge a much higher premium for my services.
It is not the traditional investment model that you know, but by scaling myself up, taking some training, and putting in the work, I can now make in a week what I used to make in two months or more.
That’s a solid ROI if you ask me.
You’re mostly your own best chance at making it big.
Even if you invest in teaching yourself all you need to know to invest in other things, it will be worth it when you start making informed decisions and better money.
6. Learn that it’s okay to lose sometimes
Even the most legitimate investments have their off days.
There have been multiple reports of people like Elon Musk who are known to be brilliant founders and investors, losing over $10 billion in a day.
This is a huge chunk of money and a decent chunk of their known net worth.
However, they understand that going down doesn’t mean staying down.
A lot of people believe investing will produce only wins. This is not true. If it were, I would not be writing this piece. I would be busy looking for something – anything at all – to invest in.
When you take losses as part of the process, they don’t faze you as much. The aim is to consistently make more than you lose. Do that, and you’ll be fine.
P.S. This is not an excuse to lose money in illegitimate ventures.
Did I scare you yet?
I hope not.
Investments are beautiful. They can secure your future and give you something to fall back on if done right.
But when they are done wrong, they can steal your breakfast from right under your nose, and postpone your lunch without any promise of dinner, for months, if not years.
Know what you are doing, take the above pointers to heart and you have a better chance of smiling to the bank with profits.
Guest Contributor: Christopher
Some call me Christopher. Others call me Olanrewaju. No matter what you call me, I just want to write more compelling copy and make more money.
We hope you learned a thing or two about what you should know when investing in Nigeria.
Be sure to read other relevant and interesting articles on investing here on the blog.