Best Dollar Investment in Nigeria

Because of the depreciation of the Nigerian Naira to the Dollar, a lot of people have been looking for ways to diversify their portfolios so as to preserve their capital from devaluation.

This devaluation of the Naira is what has encouraged most people to find smart ways of investing in dollar-denominated assets.

Are you just beginning your journey into the investment world? Or are you a seasoned investor looking to secure your wealth? Then it is important for you to know the best options for investing in dollars even while in Nigeria.

In this article, we will learn about some of the best dollar investments in Nigeria including real estate, international equities, bonds, mutual funds, cryptocurrencies, and digital assets. We will also look at how you can start your financial journey by investing them.

Firstly,

Why should you choose Dollar investments?

If you have not yet realized it, the Naira has been under a lot of pressure because of different factors like inflation, fluctuating oil prices, uncertainties with policies, etc.

Between 2015 and early 2024, the value of the Naira has dropped to over 500% against the US Dollar and other hard currencies. This alone has caused a lot of investors to lose substantial amounts of their wealth in the real sense.

Because of this sharp decline, many investors are looking for more stable assets to invest in, leading to the desire to try dollar-based investments.

With the statistics in mind, it is only wise for smart investors to hedge against further depreciation of the Naira by hopping on verified investment options in hard currencies like the US Dollar.

Benefits of Dollar Investments

1. Hedge Against Inflation:

One of the things I love most about dollar investments is that it protects your wealth against inflation and Naira devaluation.

When you have assets in stable currencies like the US dollar, you can preserve your purchasing power and maintain the value of your investments.

2. Exposure to International Markets:

Investing in dollar denominated assets give you exposure to the international markets and opportunities that may not be available in Nigeria.

It helps you tap into companies and industries that have the potential for growth, and are not limited by Nigeria’s economy.

3. Higher returns:

Based on past results, many dollar investments like international stocks and bonds have proven time and again to yield high returns when compared local investment options.

If you are interested in the growth of your capital, this should make it a more attractive choice for you.

4. Preservation of Wealth:

Investments in dollar tend to be more reliable in terms of storing value especially in a country where the economy is very unstable, as is the case in Nigeria.

Because of how strong the dollar is (as compared to the Naira) your wealth can be preserved for a long time.

Now that you know the benefits of investing in dollars, let’s look at some of the best dollar investment opportunities available here in Nigeria.

1. Foreign Real Estate Investments

Real estate is almost always a game changer, whether at home or abroad.

Investing in high demand cities like New York, London, or Dubai can give you a stable/high return on your investment in US dollars.

If as an investor, you are interested in long term appreciation of your capital or consistent rental income, this could be an excellent option for you.

This is one of the long standing financial secrets of many wealthy people in Nigeria and they use this as a means to maintain or grow their wealth and net-worth.

To start;

First, research to find growing markets that have the potential of yielding high returns and where your capital can grow.

You may go for cities like Dubai and Miami because they are known to give good real estate deals for foreign buyers.

Take advantage of real estate investment platforms like RealtyMogul and Fundrise. These companies give small investors the opportunity to buy shares in commercial and residential properties. Their returns are paid in dollars and you don’t even need to buy the entire real estate property.

If you have enough money, you can also invest in properties that can generate income for you through rents. This sort of arrangement will give you a consistent cash flow in Dollars and will hedge against the inflation in Nigeria.

Also, there are a lot of ETFs that focus on real estate. If you have limited funds, you can start by investing in these and as your wealth grows, you progress to more capital demanding investments.

2. Investing in US Stocks and ETFs

One of the easiest ways you can invest in dollars is by buying shares in companies listed on the US stock exchanges.

There are a wide variety of investment opportunities available on the US stock market, whether you would like to buy stocks or giants like Apple, Amazon, and Tesla or established blue-chip companies like Coca-Cola, Johnson & Johnson, etc.

Why choose US stocks?

The US economy is actually one of the largest and most stable economies in the world. Even when the global economy is in shambles, major US stocks still find a way of bouncing back rather quickly and growing steadily from there.

Technology and Innovation

There are many innovative companies who are global leaders in the tech space. These companies grow really fast and so, investing in them leads to capital growth for you too.

Opportunity to diversify: Because of the numerous options available on the US Stock market, you can choose to invest in a wide range of options across different industries and minimize risk.

 How to Invest

1. Open an account with a brokerage that gives you access to US markets. Some popular options are Bamboo, Trove, and Chaka. These apps allow Nigerians to buy and sell US stocks and ETFs directly from their phones. Bamboo is my personal favorite. It is beginner friendly and easy to understand/navigate.

2. Choose between stocks and index funds or ETFs. If you would like to take a diversified approach towards investing, I recommend going for index funds or ETFs like S&P 500 or NASDAQ-100. This is because they track specific sectors or how the market generally performs.

3. Dollar Bonds and Eurobonds

If you’re an investor who is interested in stable dollar returns, bonds are another low risk option for you.

When you invest in dollar-denominated bonds or Eurobonds, you can be getting fixed interest payments in US dollars; which will act as a steady stream of income for you, regardless of how the Nigerian economy performs.

Why go for Dollar Bonds?

1. Low risk: what I love most about bonds is that they are generally considered lower risk compared to stocks, and this makes them perfect for conservative investors.
2. Fixed income: over a specified period, bonds will generate interest for you. This can give you predictable passive income streams without your needing to put in extra work.
3. Hedging your returns from the inflation that is plaguing Nigeria’s economy.

 How to Invest

Buying the Nigerian Government Eurobonds: Once in a while, the government gives out Eurobonds that are dollar-denominated. These bonds usually have attractive interest rates and are backed by the full faith of the government.

Buying of Corporate Bonds: Some big companies also sell dollar-denominated bonds too. As an investor, you can buy these through investment banks or financial platforms. Ask from your local bank if they offer these bonds.

4. Cryptocurrency and Stablecoins

While some investors are conservative, others are very aggressive. These types of investors want the highest possible returns with their investments and don’t mind the high levels of risk that may be involved.

If this describes you, then you would love to invest in cryptocurrency.

Recently, a lot of Nigerians, especially youths, have welcomed cryptos with open arms. These coins present an alternative to the regular kind of assets we know.

Even stablecoins have become a popular way of investing in digital assets while minimizing how volatile they can be. Stablecoins are cryptocurrencies that are fixed to the value of the US dollar, e.g USDC and Tether (USDT).

Why Choose Cryptocurrency?

1. There is a potential for High Returns when investing in cryptocurrency as seen in the value of Bitcoin and Ethereum today.

Even though they tend to be volatile, these and other cryptocurrencies have seen massive growth in recent years.

With this increase in value, your capital also grows.

Decentralization: Cryptocurrencies are not under the influence of any central bank. Because they operate independently, they are secure against any country’s economic instability.

If you don’t want to experience extreme volatility, you can invest in stable coins and still earn returns in dollars.

Just register on platforms like Binance or Luno. Next you decide whether to buy and sell cryptocurrencies or whether to buy stable coins like USDT to store your wealth and hedge against depreciation.

Conclusion

As a smart Nigerian, one of the best financial actions you can take is to take advantage of dollar investment options available to you.

It’s not a great experience to have all the wealth you’ve gathered eroded by inflation and so investing in dollar-denominated assets is a great way to protect your wealth against Naira depreciation.

Not just that, dollar investments give you exposure to global markets and generally yield higher returns.

Whether you want to start with investing in foreign real estate properties, US stocks and bonds, cryptocurrencies, or mutual funds, the ball is now in your court.

Before investing though, you should carefully assess your risk tolerance, set your financial goals, and determine a timeline for your investments.

Investing in different classes of assets is another thing you want to pay attention to, so as you maximize your potential returns and minimize your risks.

Which of the above investment options will you start with?