Where to invest money to get good returns in Nigeria

I’ve learned from experience that the best types of investments are usually the most profitable ones. An Investment that gives you high returns will make you glad that you started investing in it, in the first place.

Because of how diverse the economy of Nigeria is, there are different opportunities to invest in and yield good returns and in this article, you will learn about some of those different opportunities.

Each of these different sectors have their own  advantages and disadvantages and we are going to look at all that.

Where to Invest Money to Get Good Returns in Nigeria

1. Real Estate Investment
2. Agriculture
3. Financial Markets
4. Foreign Exchange
5. Technology and Startups
6. Renewable Energy 
7. FGN Bonds
8. Fixed Deposits
9. Treasury bills

1. Real Estate Investment

With the high and ever growing population in Nigeria, there will always be a high demand for real estate properties. While some people may need  residential properties, others may need commercial or industrial ones.

Did you know that Nigeria’s population has been projected to become the third highest in the world by 2050? This potential increase in population is a green flag for those who are interested in going into the real estate sector.

Some investment opportunities available in real estate include;

• 📍Buying of land in rural or semi-urban areas with the goal of long term appreciation. After a few years, the price of these land can significantly appreciate and give good returns on your investment.
• 📍Building and renting out residential properties, especially in urban areas. A lot of people are in search of affordable and comfortable housing in major cities.
• 📍Building and renting out commercial properties, especially in urban areas too. Office spaces, hotels, shopping malls etc, are increasingly needed because of how entrepreneurship has grown in the country.

Advantages

• 📍Ever increasing demand because of urbanization and housing shortage in most cities
• 📍With time, most real estate properties have the tendencies to appreciate in value.
• 📍Your commercial or residential property can generate a steady stream of passive income for you through rents.

Disadvantages

• 📍To invest in real estate, especially in most urban areas, you need significant capital, which can be a barrier if you don’t have the required funds.
• 📍Because of location and other economic factors, the value of a property can fluctuate and this fluctuations may affect your potential returns.

1. Agriculture

Through generations, agriculture has remained an important factor in the economy of Nigeria.

Over 70% of the population are directly or indirectly employed by agriculture and over 25% of the country’s GDP is generated by agriculture.

The current and past governments have been interested in agricultural development in their attempt to diversify the economy.

Offering grants to assist startups, fertilizers for farmers, improved species of seedlings, and many other incentives.

Because of this, there’s been several opportunities for investors to profit from this sector.

Some investment opportunities available in the agriculture include;

• 📍Cultivation of cash crops like cashew, cocoa, oil palm, rubber, etc.
• 📍Cultivation of food crops like cassava, beans, rice, and yam.
• 📍Processing of food crops like cassava for starch and ethanol, coconut for coconut oil, milk and raffia, oil palm for kernel, kernel oil,  palm oil, etc.
• 📍Rearing of livestock like poultry, cattle, goat,  fish, snail, etc. All these are in high demand for meat, eggs and dairy products.

Advantages

• 📍The support given by the Federal and different state governments through incentives, policies and unique programs make it easy for investors to enter into this sector.
• The government is focused on diversifying the economy and boosting agricultural production through these strategies.
• 📍With the population of Nigeria steadily increasing, there is a high demand for food and agricultural products. This high population means that you are sure of a ready and waiting market for your investment thereby leading to high yields on every investment you make.
• 📍 Nigeria’s climate and very fertile soil work together to favor the cultivation of wide species of crops. When done in large quantities, these crops can be exported to other parts of Africa and the world at large.

Disadvantages

• 📍To get involved in large scale agriculture, you will need huge capital to acquire land, improved seedlings or other necessary things. In the absence of the needed finances, you may be limited in operations.
• 📍Sometimes, farmers have huge losses harvest because of inadequate transport facilities to connect their farms to major cities. Most farms are located in rural villages and must be transported to cities where there is a waiting market for them.

3. Financial Markets (The Nigerian Stock Exchange)

The Nigerian Stock Exchange is another place you can invest in and get good returns.

Many companies are listed across different sectors of the economy, giving you a great opportunity to diversify your portfolio.

There are also options like government bonds, treasury bills, and mutual funds which are very safe investment options. What’s more? They yield consistent  returns over a specified time frame.

Advantages

• 📍Diversification: Because there are many investment options in the Nigerian Stock Exchange, you can spread your level of risks across different sectors. If there is a downturn in one sector, other sectors may not experience the same.
• 📍Highly liquid: It is very easy to buy and sell Stocks and bonds making it very liquid. This also makes it easy to adjust the investment strategy if necessary.

Disadvantages

• 📍High Volatility of the Market: The stock market can be very, very  volatile because stock price are easily influenced by economic and political factors. This volatility can affect your return on investments.
• 📍Difficult for beginners to Understand: To succeed at investing in the stock market, you need to understand the market. That means that an investor who is just starting out may find it hard to make the right investment choices, especially without a professional advisor.

4. Forex Trading

Foreign exchange (also known as forex) trading has gotten popular in Nigeria in recent years.

Many youths have gone into investing in the forex market mainly because of the creation and growth of some online trading platforms.

Forex trading typically revolves around buying and selling of currencies while making profits from the differences in their exchange rates at a given point in time.

I personally consider this to be a very high risk type of investment because it is very speculative and the market is very volatile.

Investment Opportunities

• 📍 Pairing of currencies: You can buy and sell some popular currency pairs like US Dollar/Nigerian Naira or Euro/US Dollar to take advantage of the market’s fluctuations. Sell when the price is High and buy when the price is low.
• 📍 Availability of Online Trading Platforms: With platforms like HotForex and OctaFX, Nigerians are able to access global forex markets, and there trade the currencies, commodities, and indices of their choice.

These trading platforms usually have a lot of educational resources and tools to teach and assist you, so you can make informed investment decisions.

Advantages

• 📍Highly Liquid: Just like the stock exchange market, the forex market is very liquid, making traders enter and exit their positions (either as buyers or sellers) easily without having a major impact on the market prices.
• 📍Access to the Global Market: From anywhere in the country, you can have access into the global market. This gives investors the opportunity to make profits from international currencies.

 Disadvantages

• 📍Very Risky: Forex trading is very speculative. There is a lot of guesswork done because you are not never sure of the direction the market trend will go. It’s so easy to make huge profits but at the same time, you can lose everything within a few minutes if you are inexperienced.
• 📍Complicated Nature of the market: The forex market is complicated and so, it’s difficult to succeed if you don’t have a good understanding of the market dynamics. This poses a huge challenge to beginner investors who don’t have enough knowledge and experience.

5. Technology and Startups

Nigeria’s technology sector has become internationally recognized because of how fast it is growing; with major cities like Abuja, Lagos and Port Harcourt in the frontline.

There are a lot of innovative tech start up brands in fintech, agritech, healthtech, edtech, e-commerce and software development. These startups are enjoying investments from local and international investors because of the unique problems they solve in today’s digital age.

The tech sector is a great place to invest and gain high returns because of the penetration of Internet services to most parts of the country, youthful population and the increasing desire for digital services.

6. Energy and Power

Another sector that has tremendous investment opportunity is the renewable energy sector. In most parts of the country, there is inconsistent electrical supply and a lot of people are turning to alternative sources of power like solar and wind energy.

This demand for reliable sources of energy has created a great opportunity for investors and companies who want to solve  the problem of energy creation and distribution.

Other investment opportunities that yield high returns are fixed income instruments such as;

• FGN Bonds
• Fixed Deposits
• Treasury bills

For extensive information on these ones, check out this article on our blog.

Conclusion

Every investor deserves good returns on their investment that is why this article was created to give you an idea of where to invest in, if you are looking for good returns.

Before you go ahead with investing, make sure to conduct a comprehensive research on the specific type of investment you want to go with.

To avoid losing your capital, beware of Ponzi schemes and any investment that promises outrageous returns. Most of them may be attempts by fraudsters to steal from genuine investors.