An 8-Step Guide For Beginners – Piggyvest Blog (2024)

In our comprehensive article for beginner investors, we covered investment basics and answered some of the most popular questions about investing. Now, we’ll show you exactly how to invest money in Nigeria.

You must first evaluate your financial goals when investing money. Then, you can decide how you want to manage your investments, pick an investment vehicle, calculate the amount to invest, analyse your risk tolerance, and choose a sound investment strategy. Afterwards, you can build your portfolio.

If you’re new to investing or looking to explore opportunities in Nigeria, this 8-step guide will help you navigate the process.

1. Evaluate your financial goals

Here’s the truth: investing is the best way to build generational wealth and secure a stable financial future for yourself — except you’re a trust fund kid. Even then, you can approach Elon Musk-levels of riches with one or two (or maybe a few dozen) profitable investments.

But before jumping into the beautiful (and treacherous) world of investing, you need to evaluate your financial goals. How can you do this?

You should start by asking yourself what you hope to achieve through your investments and how they tie into your overall financial plan. Think about both your short-term goals (like a vacation or buying a new car) and long-term objectives (stuff like wealth-building for a comfortable retirement and leaving a legacy for future generations).

Then, ask yourself some hard money-related questions. Be honest with yourself. Grab a pen and paper and write them out if you need to.

Are you interested in retirement? Do you want a new home? Or are you more concerned about your children’s education? Maybe you prefer a life of japa and maximum enjoyment — far from the evil clutches of sapa?

Answering these questions (and others you come up with) will help you understand your financial objectives and ensure you make money choices that align with your aspirations.

Plus, by clearly defining your goals, you can create a practical roadmap for your financial journey and move on to the next step of investing.

2. Decide how you want to manage your investments

Next, you need to determine how hands-on you want to be with your investments. Will you take a do-it-yourself approach or seek the guidance of a financial advisor? Both options have their merits, and it’s important to choose a strategy that suits your comfort level and expertise.

If you decide to handle your investments yourself, you’ll have the freedom to research and choose your own investments — whatever you like! The good thing about this approach is that it can be rewarding if you enjoy diving into the world of stocks, bonds, crypto and other financial instruments.

However, it can also be a lot of work. After all, a hands-on approach requires you to stay informed about company performance and other economic indicators that may impact your investments.

On the other hand, working with a financial advisor means you’ll get expert guidance and personalised investment recommendations — for a fee, of course. This approach is excellent if you’re an enthusiastic (but cautious) newbie investor, since your financial advisor will help you create a diversified portfolio tailored to your financial goals and risk tolerance.

They can also offer valuable insights and help you navigate complex financial decisions — everything from taxes to retirement savings strategies.

The best choice depends entirely on you. However, the peace of mind and potential for higher returns that come with hiring a financial advisor can make the option a worthwhile investment.

3. Choose an investment vehicle

Once you’ve defined your financial goals and investment management style, it’s time to choose the right investment vehicle. You can access various options in Nigeria — including stocks, bonds, mutual funds, real estate and even crypto — but we recommend sticking with one or two when you’re starting.

Ensure you research each option carefully and consider factors like risk (more on this later), return potential (your expected returns) and liquidity.

Choosing an investment vehicle is not a joke, as the “wrong” one might mean loss or financial ruin. Therefore, we recommend you take time to understand what you’re investing your money into.

For example, stocks (or shares of ownership in a company) offer high returns. Unfortunately, they also come with higher risk profiles due to market volatility. However, bonds — the debt securities issued by governments or corporations — provide a fixed income stream with lower potential returns than stocks.

Mutual funds pool money from various investors to invest in a diversified portfolio of assets, offering you a convenient way to diversify your portfolio. Real estate investments involve purchasing property to generate income or profit through appreciation. This property can include residential properties, commercial real estate or even land development projects.

Each investment vehicle has its own set of advantages and risks, so it’s essential to align your choice with your financial goals and risk tolerance.

4. Determine how much money you want to invest

Deciding how much money you want to invest is an essential but often overlooked step. We don’t recommend you channel your life savings into a venture, so you must assess your current liquidity (how much money you have after fulfilling all your financial obligations) and determine how much you can comfortably allocate towards investments.

Still, you must balance investing significantly and maintaining an emergency fund or cash reserve. It might not be in your best interests to start investing if you don’t have an emergency fund, but you can quickly build one using the Flex Naira feature on PiggyVest.

Flex Naira allows you to enjoy up to 8% per annum on your capital, and you can access these funds when needed.

5. Analyze your risk tolerance

We’ve mentioned the concept of risk a few times in this article — for good reason. The truth is that understanding your risk tolerance as an investor before making investment decisions can help you protect your money.

In summary, risk is the possibility of losing some or all of your money on an investment. Different investment vehicles carry various levels of risk and you might be more exposed in one venture compared to another.

Stocks, for instance, tend to be more volatile than bonds, and real estate can be relatively low-risk ventures in Nigeria.

So, conduct thorough research, diversify your investments and stay informed about economic and political developments to protect yourself.

There’s no zero-risk investment in the world. None at all. The trick is to assess how much risk you can tolerate and ensure your investment choices align with your comfort level.

6. Consider the kind of investor you want to be

This step is about determining your investment strategy. But before that, you need to consider the kind of investor you want to be. There are different types of investors. Some prefer a cautious, long-term approach, and others are more comfortable with short-term, high-risk opportunities.

Reflect on your personal style and financial goals to determine the investment strategy that will help you reach your goals.

If you’re unsure of the kind of investor you are, we recommend you take our investor personality quiz to find out. Don’t worry. The quiz should take you less than two minutes to complete!

7. Build your portfolio

Now, it’s time to invest your money. To do that, you’ll need to buy the specific assets you want or take the next steps recommended by your financial advisor. The actual process will depend on the investment vehicle you’re working with.

After investing, you can focus on building your portfolio.

An investment portfolio is a collection of assets that work together to help you achieve your financial goals. You can have multiple assets in your portfolio, but we recommend you build a well-diversified portfolio. This type of portfolio reduces risk since you spread your investments across different asset classes.

To diversify, you can allocate your funds to a combination of stocks, bonds, real estate and other investment options to create a robust and balanced portfolio. Of course, what counts as “robust” is up to you, and we recommend you stick to your chosen strategy.

8. Monitor your investment performance and improve as needed

Having a portfolio isn’t the last step of investing. You need to monitor this portfolio’s performance and compare it to relevant benchmarks — as regularly as possible. This way, you can determine which assets are working and why they’re excelling to make adjustments (or withdrawals) as needed.

For example, some investments have a short life cycle (minimum 9 to 12 months for most Investify assets), and others have a long life cycle (like 30 years for a mortgage). Therefore, you might need to make more strategy adjustments in the latter investment compared to the former.

Also, regularly review your portfolio’s asset allocation, rebalancing as needed to ensure it always aligns with your investment strategy. But don’t forget to analyse the impact of economic and market changes on your investments and make informed decisions accordingly.

Ultimately, your investment’s success will depend on regular evaluation and improvements.

What investment makes the most money in Nigeria?

While the potential for profitability can vary, some investments in Nigeria have historically shown the potential for significant returns. Real estate, for example, has been a popular avenue for wealth creation for many years. In fact, according to Statista, Nigeria’s real estate sector is expected to hit $2.26tn by the end of 2024 compared to $1.93tn earlier this year.

You can get in on the real estate action today by using Investify to access real estate opportunities on PiggyVest and earn up to 35% yearly returns.

Here’s how Investify works:

1. Log in to your PiggyVest app.
2. Go to “Invest” and choose an investment opportunity.
3. Click on “Invest Now.”
4. Type in the number of units you want to buy and click on “Next Step.”
5. Confirm your Investment.
6. Click on “Invest Now.”

Stocks are another great option. Stocks of well-established Nigerian companies can offer substantial returns over time, and you can cash out on these in a few years.

However, it’s important to conduct thorough research and seek professional advice before making investment decisions. Even a seemingly safe and juicy option can lead to serious loss if it turns out to be a scam.

Tips for investing money in Nigeria

Knowledge is power when you’re an investor, and it can be the difference between getting life-changing returns and losing your capital. And while we might be unable to predict the future of your investments, we can share some timeless tips for investing money.

Here are some surefire tips for investing money in Nigeria:

• Stay updated on all trends and economic indicators that affect investments.
• Diversify your portfolio early to spread risk across different asset classes and sectors.
• Take a long-term perspective when investing, and avoid making reactionary adjustments to your portfolio based on short-term market fluctuations.
• Regularly review and rebalance your portfolio to ensure it aligns with your financial goals and risk tolerance.
• Consider investing in sectors with growth potential, like technology, Artificial Intelligence (AI) and renewable energy.

You can take these tips as beginner investment advice and incorporate them into your investment strategy for maximum results.

Key takeaways

Investing is profitable, but the optimal way to approach it is with careful planning and a long-term perspective. By staying informed and using the steps in this guide, you can confidently navigate the Nigerian investment landscape and maximise your wealth-building potential.

Happy investing!