Over the years, the economic situation in Nigeria has become quite challenging, hence, affecting the relative ease of building long-term wealth for Nigerians. The country is faced with various challenges such as insecurity, high unemployment rates, and inflation, which have affected the financial stability of Nigerians.
However, with proactive measures and approaches to building wealth like investing, many can still go on to achieve this goal of financial stability and freedom.
Investing is the act of allocating funds with the expectation of generating income or profit in the future. It is a long-term financial strategy that requires discipline and patience, but can be very rewarding for those who are willing to put in the effort.
In this article, we will explore how investment can help Nigerians build long-term wealth, and some of the investment options available in the country.
Why Investment Is Important for Building Long-Term Wealth
Generates Passive Income
One of the main benefits of investing is that it can generate passive income. Passive income is money earned without having to actively work for it. This means that as you invest your money, it starts to work for you, and you earn income without having to put in much effort.
For example, if you invest in dividend-paying stocks, you can earn a portion of the company’s profits as a dividend, which means that you will receive a regular income without having to actively work for it. The same goes for rental properties. If you invest in a rental property, you can earn rental income without having to actively manage the property.
Builds Wealth Over Time
Investing is a long-term financial strategy that can help you build wealth over time. By investing regularly, your money has the potential to grow exponentially over the years. For example, if you invested ₦1,000,000 in the Rise Real Estate plan in 2019, it would have gained about ₦800,000 by 2023 in interest, as it returned 17.74%, 15.18%, 15.09% and 13.87% in 2019, 2020, 2021 and 2022 respectively. This is a significant return on your investment, and it shows the power of long-term investing.
Helps Beat Inflation
Inflation is the rate at which the general level of prices for goods and services is rising, which, unfortunately, can erode the value of your money over time. This means that the money you have today may not be worth as much in the future. For example, a crate of eggs cost ₦1,000 in 2021, and as at the time of writing this, 2023, it costs about ₦2,600. Hence, if ₦30,000 could buy 30 crates of eggs in 2021, you’ll need about ₦78,000 to purchase the same number of crates in 2023. However, by investing, you can beat inflation.
When you invest your money, it has the potential to earn a higher rate of return than the inflation rate. This means that your money can maintain its value over time, and you can preserve your purchasing power. For example, if inflation is 5% per year, and your investment earns a return of 10% per year, your investment is effectively earning a real return of 5% (10% – 5% = 5%), which is higher than the inflation rate.
Investing also allows for diversification, which is the practice of spreading your money across different asset classes. This is important because it can reduce risk and increase potential returns, helping you build long-term wealth. For example, if you invest all your money in one stock and that stock performs poorly, you could lose a significant portion of your investment.
However, suppose you diversify your investment across different stocks, bonds, and real estate, you can reduce the risk of losing money because not all investments will perform poorly simultaneously.
Investment Opportunities in Nigeria
There are several investment opportunities available in Nigeria, ranging from stocks to real estate to fixed-income securities. Here are some of the most popular investment options in Nigeria:
Stocks, also known as equities, represent ownership in a company. When you buy a stock, you buy a share of ownership in the company. If the company does well and its stock price increases, you can sell your shares for a profit.
In Nigeria, there are companies that offer investors different stock options, ranging from Nigerian stocks to foreign stocks like Meta, Alphabet, JPMorgan, and Apple. One of these companies is Risevest, a dollar-denominated investment platform that puts your money in high quality assets, helping you build wealth and achieve your financial goals.
Investing in stocks can be risky, as stock prices can be volatile and subject to market fluctuations. However, over the long-term, stocks have historically provided a higher rate of return than other investment options.
Real estate refers to land and any structures on it, such as houses, apartments, or commercial buildings. Real estate can be a lucrative investment option, as property values tend to appreciate over time.
In Nigeria, real estate is a popular investment option, particularly in Lagos and other major cities. There are several ways to invest in real estate in Nigeria, including buying land or property, investing in real estate investment trusts (REITs), or investing in real estate crowdfunding platforms like Risevest.
Real estate can be a profitable investment, but can also be risky. Property values can be subject to fluctuations, and managing rental properties can be time-consuming and costly.
Fixed Income Securities:
Fixed-income securities are investments that pay a fixed rate of return, such as government bonds or corporate bonds. These investments can provide a steady income stream and are generally considered less risky than stocks or real estate.
Corporate bonds, on the other hand, are issued by companies and can provide a higher rate of return than government bonds, but are generally considered riskier. On Risevest, investors have access to invest in the fixed income plan, which is a low-risk asset perfect for anyone who wants to protect their money in a secure, appreciating currency. The Rise real estate plan returns 10% per annum.
Mutual funds are a type of investment vehicle that pools money from multiple investors to invest in a portfolio of stocks, bonds, or other securities. Mutual funds are managed by professional fund managers, who make investment decisions on behalf of the investors.
In Nigeria, there are several mutual funds available, including equity funds, fixed income funds, and money market funds. Mutual funds can be a good option for investors who want exposure to a diversified portfolio of securities, but do not have the time or expertise to manage their own investments.
Risevest Build Wealth Plan:
Risevest is a Nigerian investment platform that allows individuals to invest in stocks, real estate, and fixed income. Our Build Wealth Plan is a long-term investment plan that is designed to help Nigerians build wealth over time.
The Build Wealth Plan is a portfolio of low-cost index funds that are diversified across different asset classes and geographies. The portfolio is designed to provide a mix of growth and stability, which you can rebalance regularly to maintain the desired asset allocation.
The Build Wealth Plan is based on the principle of diversification, which means spreading your investments across different asset classes and industries to minimise risk. The plan includes a mix of stocks, bonds, and real estate, and is designed to provide a balance of growth and income.
The plan is also designed to be flexible, allowing investors to adjust their investments based on their risk tolerance and investment goals. Our platform makes it easy for investors to track their investments and make adjustments as needed.
Investing is an important tool for long-term wealth building, and there are several investment opportunities available in Nigeria. Stocks, real estate, fixed income securities, mutual funds, and cryptocurrencies are all options for investors looking to grow their money over time.
Investing can be risky, and it’s important for investors to do their research and understand the risks involved. However, with the right investment strategy and a long-term perspective, investing can be a powerful tool for building wealth and achieving financial independence.
By using Risevest, Nigerians can take advantage of investment opportunities available and build long-term wealth.