Investing overseas from Nigeria part 2 – Part one is here.
Table of Contents
Investing from Nigeria
Money is not just a means of providing life, but also a financial instrument that generates income. Keeping money at home, even by exchanging rubles for foreign currency, is unprofitable: inflation devalues savings, goods, and services become more expensive. There are many ways to make money work: start investing, open a bank account, or acquire valuable assets. Let’s figure out where it is worth or, conversely, you should not invest your savings in order to save them and get additional income.
Where you should not invest?
Novice savers and investors should avoid overly risky ways to increase their capital, even if they promise very high returns. Remember, the higher the interest offered, the stricter the deposit requirements and investment risks. Highly profitable, but risky ways to make money on investments include trading, investing in cryptocurrency, and financial pyramids.
- Cryptocurrency. Recently, bitcoins have shown significant growth, so many novice investors naturally want to make money on cryptocurrency. But you need to remember that this type of “currency” is not backed by anything, so it is almost impossible for a beginner to predict its growth or fall. Mining is costly and does not bring as much profit as directly trading Ethereum or Bitcoin. Plus, there are restrictions on the turnover of these units of account, and their cashing out is difficult and associated with additional costs.
- Financial pyramids. A risky and unsafe way to generate additional income associated with the use of fraudulent schemes. We strongly do not recommend considering this investment option. Financial pyramids or HYIP projects are similar to investment funds, but the main difference is the high declared return, for example, 1% per day. HYIP projects often operate only with electronic money, and the profit of participants is ensured by attracting new customers, while there is no real investment. Such projects have their own websites, channels in social networks, but are not included in the register of mutual funds of the Central Bank, do not have official registration. It is not possible to guarantee the income and protection of participants’ funds.
You can invest money only in trusted banks and investment projects: this is the only way you can not lose your savings and get income.
Shares and bonds
Stocks and bonds are securities of various private or state enterprises, which can later be resold or receive regular payments on them – dividends. With proper management of such assets, they can provide a much higher income compared to a regular deposit, but the risks of losing funds in this case also increase. Unlike a deposit, where in the worst case you can simply exit with the same amount that you invested when investing, you can lose part of the funds.
Another option is to open a brokerage account, which will allow the client to independently enter the stock exchange and buy shares of companies of interest to him. This way can be a great option for investors who have already determined their investing sector.
Precious metals — gold, platinum, silver, and palladium — remain valuable even in times of major financial crises, which is why many people prefer to invest some of their money in this particular asset. It can be difficult even for a specialist to predict the profitability of such investments with a guarantee – the risks are about the same as when investing in stocks: if the price falls, you lose money. The purchase of precious metals will bring income if the client is ready to invest his money for a sufficiently long period – an average of 5 to 15 years.
You can buy traditional bars or coins, or open an anonymous metal bank account. Such an account will display information about the metal purchased by the client, but the metal itself is not given out. This way of investing your money is more suitable as you can begin investing with the smallest amount of metal without having to immediately spend a large amount to buy a whole bar.
Another very popular way to get high profits and increase your funds is to invest them in real estate. It will require you equity or borrowed funds, which will show the competent planning, market analysis, and a reliable financial position of the investor. You can make money in real estate in the following ways:
- Purchase for resale. Here, you can buy real estate at the construction stage, when the pricer each square meter is on the minimal level, but the finished object will be sold at the maximum price. But real estate cannot be sold overnight, and in a difficult situation with a reduction in income, you can quickly get rid of such assets only if you put the price well below the market. With an increase in construction time, oversupply or a decrease in customer demand for a particular facility or residential complex, there will also be problems with return on investment. Plus, against the backdrop of lower mortgage rates specifically for new buildings, many buyers refuse to purchase real estate from non-developers, which also negatively affects the overall profit during the sale.
- Purchase of residential or commercial real estate for rent. This method will allow you to receive monthly passive income for a long time, and will also retain the opportunity, if necessary, to sell this object and receive additional free funds. With this investment option, it is important to maintain a balance of income and expenses. You can only rent a finished object, and if you buy it at the construction stage and with borrowed funds, the return on investment will be long. Even when buying a ready-to-use facility at your own expense, there are risks and additional costs. Repairs may be required, the tenant will turn out to be unreliable, the object itself is chosen incorrectly and is not in demand.
- Real estate investment. Here you join the mutual funds or closed investment projects that increase the money for residential and commercial construction. High returns are shown by investments in the construction of trade facilities and tourist infrastructure in large cities, but the profitability of such an investment directly depends on the amount of own funds and the liquidity of the selected object.
When investing in real estate, it is worth calculating possible risks – for example, the risk of bankruptcy of the developer, as well as analyzing the state of the housing market and, finally, determining the liquidity of the selected property – the ability to quickly and profitably sell it.
Another common way to earn or just keep savings at the same level is to deposit money in a foreign currency, such as dollars, euros or Swiss francs. Interest rates on such deposits are usually much lower than on ruble deposits, but you can earn here on the very growth of the exchange rate. In addition, foreign currencies are less subject to inflation than rubles, and therefore depreciate much more slowly. You not only save money but also receive a secure income – deposits in banks are insured.
The intensively developing small business is trying to attract as much non-state money as possible, in return offering its investors a good income. Investing in a promising business project, which will subsequently actively grow and expand its client base, can bring significant profit. However, this type of investment is also subject to standard risks: the company may go bankrupt, turn out to be not as profitable as it was promised in advance, or simply close.
You can invest in such projects only when you are sure of their reliability, legal purity, and liquidity.
There are two ways to invest in a small business – by investing money through crowdlending platforms or by entering into a share with the owner. The use of online lending platforms in some cases can protect the investor from the loss of funds, but at the same time does not guarantee him a full return on the invested amount or super high returns. Projects in this category are not coming with insurance and do not provide the participant with proper protection in any way. At the same time when deposits in banks are profitable and insured, investing in a private business, you suppose all the risks.
What you should know before investing?
A person’s acquaintance with the first money occurs in a strange way: scholarships and salaries He seeks to instantly spend on some dwelling dreams and desires, while not thinking where it is profitable to invest. And only after a while there is a need to accumulate and save, and even better to increase. Now it’s time to talk about how properly invested money in your personal budget and what investment options exist.
To be honest, there are many applicants for the free money of a private investor: these are banks, financial institutions, ordinary shops, and even, alas, scammers. So, it is necessary to thoroughly consider where it is worth investing in and what lies behind the process. There are so many and very important theses that every investor should learn even before you want to invest your savings in no matter where.
Don’t invest your last cash
As an example, we can bring most of the salary or annual bonus. You can invest only free money – those that do not need you for life support in the very near future: accumulation, savings.
Don’t start with big amounts
Invest the amount of money that you can afford to forget about from your personal or family budget without any stress. Private investment is not a game of chance, but a process that requires knowledge, skills, and abilities, so learning is worth it for small amounts.
Be aware of the risk
Any type of investment comes with a lot of risks of different levels. Learn how to calculate them and find out ways to reduce (for example, compiling a diversified investment portfolio – the case when you invest in several different instruments).
Do not use not reliable sources of information about the investment process
Unfortunately, there are a lot of pseudo-useful sites on the Internet that offer tempting but dangerous strategies. Contact official sources – sites of certified brokers, the site of the Moscow Exchange, portals of banks, and issuers of securities. Moreover, serious companies have convenient mobile applications – this way you can invest and monitor the movement of your money in real time, where it is convenient for you.
Diversify your investments
Invest in different instruments, choose complex strategies, combine ways to generate income. In the context of modern economy and geopolitics, it is better to diversify their portfolio of investments not only by instruments but also by industry and country affiliation of issuers, timing, reliability, liquidity. So that you can somehow insure yourself from additional losses.
Invest only in tools you understand
You must have an accurate idea of how your money will work, at the expense of what and what time it is formed income, what risks you can incur.
Be sure to try investing again
Even if the first was not the most successful. Try to analyze your mistakes, consider new opportunities, get advises from a broker, and try again.
Start working with professionals, especially at the first stage
Working with a broker allows you to avoid stupid and offensive mistakes, learn how to work with tools, and gain access to exclusive analytics, without which competent investments are impossible. And most importantly, remember: a professional broker guarantees transparency and accountability for all operations. If this is not the case, just reject the services that are offered to you.
Pained by financial indecision? Want to invest with Adam?
Adam is an internationally recognised author on financial matters, with over 368.7 million answers views on Quora.com and a widely sold book on Amazon