The types of profitable investments cannot be seen from large returns in a short time.
There are separate risks in every investment made, therefore you must pay close attention to each investment instrument and the risks it has, so that you can invest more wisely.
Speaking of investment, have you understood the general theory when investing which says that high risk, high return?
Not only focusing on big results, but we also need to look at the big downside that can happen. Therefore, TheBusinessPost.ng has collected the common types of investments that exist in Nigeria!
Main Purpose of Investment
Before entering and understanding the various types of investments that exist in Nigeria, you should first understand the main objectives of investment activities, including:
- To gain profit (short, medium, or long term).
- To develop an existing business.
- For insurance or business emergency savings and other needs.
- To protect you and your family’s financial condition from the negative impact of inflation if it occurs at any time.
- For preparation funds with a specific purpose in the future.
Common Types of Investments in Nigeria
After discussing your main purpose for investing, let’s get to know the types of investments that are common in Nigeria today. Come on, find out more below!
1. Stock Investment
The type of stock investment that is on the rise almost all over the world is stock investment. The common way is to buy shares on the stock exchange and later you can resell them at any time. The benefits you get in this process will be in the form of dividends that will be given by the issuer of the shares.
Stocks themselves are included in the type of long-term investment. This type of investment does have a fairly large profit opportunity, but the risk that must be prepared to be faced is also quite high. That is why you must first understand the ins and outs of stock investing before actually doing it.
2. Mutual Fund Investment
The next type of investment is mutual fund investment. This type of investment is widely recommended and considered suitable for beginner investors. Mutual fund investment itself is recommended because the risk is not too high, but it can still generate decent profits, especially for novice investors.
Currently, various companies have provided many mutual fund investment platforms with very low initial capital. To be able to start investing in mutual funds, you only need to prepare capital starting from ₦10,000 only. Another advantage of this type of investment is that there is an investment manager who will assist in managing your funds.
3. Property Investment
Property investment does require no small amount of capital or capital. To be able to invest in property, at least you need to prepare capital of up to hundreds of millions of Nira. However, even though the capital is very high, property investment is very promising for the long term.
As is commonly known, the price or value of property such as land and buildings will always increase every year. In fact, the increase in value can be as much as 15 to 20 percent depending on the location and size.
Property investment is one type of investment that is believed to never subside because a place to live or a building is a basic need for everyone. You also do not have to occupy the property that you invest. You can rent or lease the property to other people.
4. P2P Lending
P2P Lending is one of the most popular types of funding instruments in recent years. This system is a service that is usually provided by a financial service or platform with a business model that brings together capital owners or lenders with individuals or business entities that need business capital.
In the P2P Lending process, later the lender will receive funds from the principal and interest returns from the loan. The benefits that can be obtained from funding on P2P Lending itself can reach 12 to 16 percent in certain business industries.
One example is TaniFund which is a P2P Lending platform that focuses on the agricultural industry in Nigeria and is ready to bring you together with the best local farmers. Find interesting agricultural, cultivation, and food MSME projects only at TaniFund!
5. Gold Investment
The next type of investment instrument is gold and various other precious metals. This type of investment is suitable for those of you who want the type of long-term investment with low risk. Because the price of gold and precious metals will continue to rise, this type of investment is considered safe to try.
Currently, there are many applications or online platforms that allow you to invest in gold online.
6. Fixed Deposit
Fixed deposits are actually almost the same as other types of savings, except that the interest they have has a higher value. Time deposits themselves usually have regular and clear maturity dates (usually 3 to 12 months).
Basically, the profit you can get by making a fixed deposit depends on the amount of money you put in. The higher the nominal, the higher the profit you can get. vice versa.
This type of investment is an investment that is considered safe because it is inflation resistant and its security is guaranteed by the bank where you make this investment.
The last type of investment is bonds. Bonds are medium-term or long-term debt securities that can later be transferred. Bonds are a type of investment that is suitable for those of you who are looking for a safe investment that is guaranteed by the government.
Debt securities listed in bonds usually contain a promise from the issuer to be able to pay rewards in the form of interest in a certain period and pay off the principal debt at a predetermined time together with the bondholders. The yield of interest received by the bondholders is commonly referred to as a coupon.
Which Investment is the Most Profitable?
Talking about which is the most profitable, of course, is talking about which things you need the most. Remember to always try to avoid things that are aggressive and impulsive. Remember when investing, you are not just looking for something that is purely profitable in a short time. Of course everything takes a process and is not always profitable. So, always pay attention to the purpose of investing, to whom you invest, the period of profit you expect to be mentally prepared to see results that may not be suitable.