To invest successfully, you need to understand what and why you invest.
Understanding the peculiarity of the asset type you are investing in helps do quality research.
Good research of these asset classes will help you determine what percentage of your capital goes into what and why.
5 Asset Classes to Invest your Money in Nigeria
Buying and selling stocks could be a great way to increase or build wealth.
Investors with medium-to-high risk appetites play heavily with this asset. Its price volatility is a risk factor that needs astute management to achieve the desired result.
Equities are proven ways to grow capital and get dividends (for dividend-paying shares).
Two great approaches to investing in this space are having a hang of fundamental and technical analysis.
These analyses help determine what stock to buy and what time to buy it. Also, what stocks to sell and when to sell them.
The capital market has varieties of diverse bonds at every period.
Bonds have different coupon rates and prices.
For bonds, you typically get paid coupons bi-annually. The coupon is calculated using the coupon rate and your face value.
For investors that are particular about having a steady income from their investments, this is a go-to asset class for you.
There are a few types of bonds, and each one has different characteristics
- Federal government bonds
- State bonds
- Sukuk bonds
- Private bonds
For bonds, you can have gains on capital when you decide not to hold to maturity. Otherwise, you get your streams of coupons. And get paid your face value upon maturity of the bond.
3. Mutual Funds
It is a pool of funds managed by professionals to access varieties of money and capital market instruments.
This form of investment does not necessarily require you to do a lot of research. The mutual fund’s managers will do that extensively for you.
All you have to do is invest in the funds and get daily returns on your money.
The relevant things to bear in mind are management fees and performance over time.
Make research on the fund managers and get a good idea of the previous performances of the fund in question before you start your investment journey.
4. Real Estate
Landed properties are mostly appreciable in this economy.
Investing in real estate comes with its own risk and liquidity problems. That’s why it is best suited for an investor looking to diversify.
There are different angles to real estate investments.
- Buy and sell land/properties at a later period
- Commercial and residential properties
Doing robust research is pertinent to success in investing in this asset class.
It could also be capital intensive.
5. Term Deposit
One of the simple investment vehicles in the market is the term deposit. Often referred to as Fixed Deposits.
It requires you to fix your capital (or funds) with a firm with a predetermined interest rate and maturity date.
It’s an easy way to invest. In most cases, it’s relatively safe to some extent.
Low-risk investors play heavily in this space.
There you have it!
There are other assets available in the market.
There are bills, CP, Structured notes, and others.
The goal is to give you a headstart on the best places to start investing your money.
You do not need to be a guru to get started with any of the above-listed assets.