Low Risk Investments in Nigeria


Investing in Nigeria can be risky and full of uncertainty especially now as the country is bedeviled with a lot of economic crises- high inflation rates, increasingly unemployment rate, tightening disposable income. Some Nigerians have had to invest in some risky investments with propensity for high returns as an avenue to make money.

It’s no surprise that hundreds of thousands of Nigerians were sucked into various ponzi schemes just to make quick money to augment their purchasing power. However, we still have investments in Nigeria that are safe and low risk. Whilst no investments available can be said to be 100% safe, there are investment available with little risk to an investor seeking to invest in Nigeria.

There are some safe investments we have in Nigeria today, where you are guaranteed to have your money back. Below are some of the safe investments in Nigeria:

Money Market Funds:
Money market fund is an open-ended mutual fund that deals in short-term discount securities such as treasury notes, bank bills and promissory notes. The money market funds are managed by experienced funds managers who are trained to optimise shareholder returns by deploying a balance mix of portfolio investing to ensure the investor’s money is safe and returns remain higher than the inflation rate.

This is one sure investment vehicle that so many Nigerians do not take advantage of due to ignorance. Nigeria has one of the lowest numbers of people investing in mutual funds, according to records from the Securities and Exchange Commission (SEC). In 2014; there were less than 250,000 unit holders. Compared this to the United States market, where about 38% of households invest in mutual funds. In Brazil, about 10 million people invest in mutual funds.

A money market fund can provide numerous benefits for investors especially in a high inflation economy such as the current Nigeria economy.

Benefits of Money Market Fund:
• Low risk: The risks of investing in money market funds are very low; the fund managers invest your funds in very low risk debt securities such as treasury bills, FGN bonds. You are very sure your capital is safe from the volatilities incurred from the stock market.

• Higher return than the inflation rate: With the current inflation rate in Nigeria stands at about 14.6%, inflation rate as we all know, the interest from the money market fund is constantly higher than the inflation rate.

• Higher returns than standard savings accounts: The most popular investment destination for many young Nigerians with a little cash to spare is saving accounts. When you deposit money in a bank account, you basically lend that money to the bank and earn interest, presently the interest rate on a savings account in Nigeria is between 3 – 4% but if you borrow money from the bank; the lending rate is between 20-21%.

• Compounding effect: Money market fund has a compounding effect on its interest; every interest accrued is added to the principal sum of the initial deposit. Your initial deposit grow at a faster rate than simple interest investment, the rate at which the compound interest accrues depends on your initial deposit and the frequency of compounding; it has a monthly capitalisation with the annual rate of interest meaning that the compounding frequency is monthly.

• Investment for your children: This is a very useful investment option for parents, who are looking to save for their children’s future or towards their university education.

Parents can start saving for their children as soon as they are given birth to, so let’s say the parents are saving for their children university education 16 years from their birth. If they can save for their children for 16years with the compounding effect on their initial deposit, the parent would not need to worry about the school fees of their children from matriculation to graduation.

• Good option for people saving up for a project: If you are planning for any project, say you want to buy a car, equipment, land etc, you can be saving up for the project as the funds keep earning interest while you continue to save.

FGN Treasury Bills:
Treasury bills are short-term debt instruments issued by the federal government through the central bank of Nigeria to provide short-term funding for the government. They are usually issued for tenors of 91, 182 and 364 days at the primary market auction held fortnightly by central bank of Nigeria.

This is one of the best investment option; Treasury bills are the most liquid and safest investments you can find in the money market. They offer guaranteed returned and are risk-free because they are backed by the full guarantee of the federal government.

Benefits of Treasury Bills:
• They enable customers to invest in high yielding assets which are low-risk
• The interests earned are tax free.
• They are good investments for idle savings.

FGN Bonds:
Government bonds offer the best investment option for people who seek security and safety of their money while creating wealth through investing.

Debt Management Office (DMO) issues the FGN Bond on behalf of the federal government; these bonds have long tenors ranging from 2 to 20 years and are issued by the government to raise money to finance projects such as roads, railways, housing, power and other infrastructures, etc.

Benefits of FGN Bonds:

• The FGN bond can be used as collateral to raise financing.
• The interests earned are tax free.
• The FGN bond can easily be tradable as it has a unique quality of being quoted on the

Nigerian stock Exchange, and can also be traded over the counter.

If you want your money to work for you then you should consider these investment opportunities in Nigeria with low risk and getting the right fund managers to manage your funds is the secret of enjoying this low risk investment.

Olodu keonyedi – is a trained engineer and by passion and personal development a public/motivational speaker, a business coach and human capacity developer, he has a B.Eng degree in Civil Engineering from the University of Nigeria Nsukka, he is a member of Nigeria Society of Engineer and a COREN registered Engineer.

Email: olodukeonyedi@gmail.com Tel: 08037489704, www.instagram.com/sir_keon. www.facebook.com/olodu keonyedi_mentorship