Here is the the complete guides for investment and wealth management in Nigeria.
What is an Investment?
Investment in a layperson’s term simply means the art of investing/allocating money for interest investment entails owning an asset or an item to yield income from the enterprise, or appreciation of your investment which is simply an increase in the value of the assets.
It is about committing time, money, and energy for future benefits. The purpose is to buy investment products like bonds, mutual funds, stock, and annuities and sell them at a higher rate than you bought them.
Why investment?
Investment is not just important, it is critical if you want to live a comfortable life even after retirement. The potential to gain more money is considerably higher if you invest rather than if you opt for savings.
Outlined below are some of the reasons you should invest.
If you want to grow your money:
Have you heard of the saying use money to grow money? This is exactly what it is talking about, invest your money on an investment like bonds, stocks, e.t.c. offers a return on your money used for the investment over the long term, this return allows your money to build up, generating wealth.
Invest because of retirement:
No matter how long you have been working in an organization or the amount you are earning monthly, or yearly, there must come a time in your life where you would be forced to retire.
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Now is the best time to put your money to work for you by investing funds to live off on the fund accrued from these investments. Based on the amount of tolerance you have for risk. You might invest at a young age to accumulate more money at an older age, as investments appreciate.
Chance to earn a higher return:
Investment offers a higher opportunity to earn a higher rate of returns than a savings account, therefore if you want to earn higher, investments are the surest way to go.
Creating and expanding a business:
Have you always wanted to open a business? Or having an extra means to earn income then the investment is the way to go. It is a very integral part of business creation and expansion, as many investors creating and establishing a business that will end up yielding a strong return on their investment.
Reaching your goals financially:
Investments help you achieve the financial goals you have set up for yourself, if you invest, you will earn a higher return over the long term and within a faster period. These returns can then meet your major financial goals like buying a home, buying a car, putting your children through school, starting up a business, and even buying a yacht lol.
How does investment?
Giving your money the chance to work for you and your future goals. It’s a little different from saving while saving just entails putting your money in a secure location. With the investment you are purchasing a product to sell over time.
Investment helps you in beating inflation through earned interest and makes strong your money purchasing power. Investment is better suited for retirement rather than saving, as savings attract little to no interest rate.
Some amazing investment strategies include:
- Investing as soon as you can because the more time your money has to work for you. The more growth opportunity it will have.
- You get compounding returns when you stay invested for as long as you can.
Like the famous saying goes don’t put all your eggs in one basket. It is always wise to diversify your investments. Do not focus on only one investment as that is risky. You could lose money when the value of that specific investment falls but can lower this risk by diversifying your investments.
Types of Investment include:
Growth investment: These are for investors willing to withstand the markets up and downs and this only pertains to long-term investors. E.g. of growth investments is shares and property.
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Defensive investment: this focuses on the generation of income consistently rather than growth. E.g. of this is a cash investment.
Fixed interest: This is when a government borrows money from individual investors and then pays them interest at a rate in return e.g. bonds.
What is wealth management?
Wealth management deals with the investment needs of affluent clients. It is a branch of financial service tasked with specialized advisory services. E.g. includes estate planning, financial planning, legal planning, retirement planning, e.t.c
Processes of wealth management are:
- Set up a financial goal: It is crucial to have a clear understanding for attaining financial objectives like career, education, business, retirement e.t.c.
- Analyze existing economic assets
- Process and analyze information
- Provide guidance
- Execute a wealth management plan
Why should we manage wealth?
- Wealth management aids in maintaining a client’s wealth and also encourages them in meeting their specific financial objectives.
- Wealth management diminishes financial pressure
- Help set a financial plan: a wealth manager enables you understand what you want from your future and your economic means to get there, the key to wealth is planning on how to attain your goals in advance.
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In order not to be cast into an entire world of financial trouble, you will need to regulate your finances properly, mismanagement of finances doesn’t reflect well on the financial impression of an individual or an organization.
Investment platforms in Nigeria
- For those with little capital and they still want to invest you can save and invest in a bank, bank gives 10% interest on any amount saved in the bank for one year, this is easy to do, all you just have to do is open a savings account with the bank of your choice, get your card and start saving.
- Invest in federal government bond: this investment opportunity works when an or an organization lends the federal government money for a specific period, in return the government pays a 13% interest and it is tax-free, you can start up with as low as 5000 to 50000000 for 2 to 20years and the interest rate is paid twice in a year.
- You can also invest in cryptocurrency, gold, stocks, real estate, agriculture, livestock rearing, oil and gas, logistics/haulage services, internet marketing.
If you want to succeed financially, you should not hesitate to read up this article and take a stand on one or more of these investment platforms listed above.