Investing 101: Managing Your Wealth Like A Pro

M36 | Money
June 17, 2021

While smart investing is a sure way to build and retain wealth, it can be a daunting prospect for beginners. In the same vein, it is a lot easier when you understand the various options in which you can invest and ultimately grow your wealth. Here are some options you can consider when taking the step to managing your wealth like a pro – explained in simple terms:

Treasury Bills

Treasury bills (T-bills) are risk-free, short-term investment instruments that are issued by the Federal Government through the Central Bank of Nigeria (CBN). It is a way the government raises funds from individuals and organisations. They are considered among the safest investments with attractive returns since they are backed by the full faith and credit of the Federal Government. In addition, the longer the maturity date, the higher the interest rate that the T-Bill will pay to an investor. Although T-bills yield a lower rate of return compared to other forms of investment, they offer safety and a predictable profit which makes them a good choice for long-term investments in your portfolio.

When investing in T-bills, it is important to take note of the prevailing rate and your expected returns upon maturity. However, if you decide to sell before maturity, you may incur a loss depending on the prevailing market value.

Fixed Deposit

A Fixed Deposit is a short-term investment that guarantees you a fixed interest rate when you keep funds for a specified period. The minimum tenor is 30 days and the maximum is 365 days – at the end of the agreed period (tenor), your principal and interest amount earned are paid to you. This product can also be used as security for cash-backed loans.

The ideal strategy for Fixed Deposit investments is to diversify and spread out your investments across various banks while striking the right balance between risk and returns. It is also important to note that if your Fixed Deposit investment is terminated before maturity, the total accrued interest not earned will be forfeited. This means that only the portion of interest earned during the period that your money was held is what will be paid to you.

FGN Bonds

Federal Government Bonds are long-term instruments issued by the Debt Management Office on behalf of the Federal Government of Nigeria (FGN). When you buy FGN Bonds, you are lending to the FGN for a specified period of time and the FGN is obligated to pay you the principal and agreed interest as and when due, meaning that they have no default risk. Not only do these bonds offer opportunities to investors willing to invest long-term but also attractive interests that are paid bi-annually (twice a year). FGN Bonds can be accessed through primary licensed dealers and before investing, pay attention to the prevailing rate, maturity, payment dates and expected returns so you can make an informed decision.

Commercial Paper

A Commercial Paper (CP) is a short-term unsecured debt instrument issued by financial institutions and large corporations with high credit ratings. As a short-term instrument, CPs normally mature within 270 days. CPs are issued at a discount, which means interest is paid upfront. CPs are more suitable for risk tolerance and before investing, you may want to do your due diligence on the issuing company and take note of its risk of default. This entails an evaluation of their credit rating, brand reputation and experience of the management team. While CPs offers a return on investment in 270 days or less, it’s paid at maturity, not periodically, like with FGN bonds and other similar debt securities. It may be wise to consider all of your investment options before investing in commercial papers.

Eurobond

Eurobonds are financial instruments denominated in a currency other than that of the issuer – for example, a Nigerian Eurobond is issued by Nigeria in U.S Dollars. Despite their name, Eurobonds aren’t necessarily denominated in Euros and can take many different forms. They are issued either by Governments or corporate institutions and are highly liquid i.e can easily be converted into cash, which is a key benefit of this form of investment.

Given that Eurobonds come as government and corporates, as a prospective investor, you have to decide which to buy. While corporate-issued Eurobonds may offer higher interest than government-issued ones, they also offer higher risk. Like every other investment, buying Eurobonds should be a well thought out process and it is advisable to review and understand the risk profile of any Eurobond that you are interested in buying.

Managing your wealth

Wealth management is personal and there’s no one-size-fits-all approach to go about it, which is why it is important to have the right knowledge and information.

Always start with a clear picture of your financial goals while understanding your risk tolerance. Once this is understood, diversify your portfolio with the mix reflecting your tolerance for risk. Understanding these investment options is essential, however, it is also important to rely on sound recommendations from experts while dismissing “hot tips” from unverified sources. While this can seem complicated, a good partner will make it simple – even exciting.

The digital investment app, M36, not only delivers a wide range of investment products, including those highlighted above, but also offers support by professional financial advisors to enable you make sound investment choices that suit your needs.

Download the M36 App from the Google Play Store or the App store today and pick Your Track to Wealth.

Sponsored by
M36

Join The Conversation

Bring a friend.

You'll like this

July 26, 2021

If making money on your own has proved futile, then maybe it’s time to find money other people are not using urgently. Please, pay attention, these are multi-billion dollars tips. 1. Go to Agent Fash Seek out Agent Fashola for special tutorials in the art of finding ‘The Unseen.’ 2. Pray and fast If flesh […]

April 28, 2020

“Money slow to enter, but money quick to go” – M.I These are the lyrics to one of the greatest songs to grace the Nigerian airways. It’s apt because everyone on some level can relate to a money struggle. Whether directly or indirectly. According to Marty Byrde – Money at its essence is a measure […]

Watch

Now on Zikoko

May 20, 2022

Nobody will pass off a chance to win an all-expense-paid trip to KENYA with the winner of Nigerian Idol Season 7. So if you are still thinking, dreaming, waiting, or thinking you have enough time, then you are wasting time because this promo is ending on the 7th of June. Do we have your attention? Here’s […]

Recommended Quizzes

December 5, 2019

We already tried to guess how much you have in your account and your current net worth, and we think we did a pretty great job (keep any complaints to yourself). Now, we’re going to try and guess your monthly salary based on your relationship with money. Oya, take the quiz: 11 Timed Quizzes For […]

October 10, 2019

2019 is certainly Burna Boy’s year, but, if we are being honest, so was 2018. Since his transcendent mixtape, Outside, the afro-fusion star has refused to get his foot of our necks — dropping a string of fantastic singles and then capping it all off with his career-best album, African Giant.  So, in a bid […]

More from Announcements

April 5, 2022

Good day fans and friends of Zikoko. I’m here to convince but not confuse you that Zikoko’s drops for the month of April are — as the kids say — fire. Purrrrr. In the last year, there’s been a lot of movement within the team. We’ve workshopped stories, angles, formats and even team structures. This […]

January 19, 2022

Infinix and Free Fire brought together several mobile gaming lovers and allowed them the thrilling experience of competing with each other for a grand prize of N150,000 for top winners. There’s nothing more satisfying than doing what you love. But what is even more satisfying is getting paid for doing what you love. In this […]

December 21, 2021

The English Premier League (EPL) will be entering a decisive stage at the beginning of the next year. As the competition comes close to its end, every point is crucial. It’s even possible to have expectations about the champions and runner-ups already. Or is it? The Africa Cup of Nations (AFCON) is also set to […]

Watch

Trending Videos

Zikoko Originals

December 14, 2020
What happens when a group of chatty young Nigerians talk about things they're passionate about? You get Nigerians talk. A show that discusses very familiar struggles for the average Nigerian. From relationship deal breakers to sex education with Nigerian parents to leaving Nigeria, be prepared for a ride.
November 2, 2020
'The Couch' is a Zikoko series featuring real life stories from anonymous people.
October 26, 2020
A collection of videos documenting some of the events of the EndSARS protests.
June 22, 2020
'The Couch' is a Zikoko series featuring real life stories from anonymous people.
June 22, 2020
Hacked is an interesting new series by Zikoko made up of fictional but hilarious chat conversations.
June 4, 2020
What happens when a group of chatty young Nigerians talk about things they're passionate about? You get Nigerians talk. A show that discusses very familiar struggles for the average Nigerian. From relationship deal breakers to sex education with Nigerian parents to leaving Nigeria, be prepared for a ride.
June 2, 2020
Quickie is a video series where everyone featured gets only one minute to rant, review or do absolutely anything.
May 14, 2020
Isolation Diary is a Zikoko series that showcases what isolation is like for one young Nigerian working from home due to the Coronavirus pandemic.
March 12, 2020
Life is already hard. Deciding where to eat and get the best lifestyle experiences, isn't something you should stress about. Let VRSUS do that for you.

Z! Stacks

Here's a rabbit hole of stories to lose yourself in:

Zikoko amplifies African youth culture by curating and creating smart and joyful content for young Africans and the world.
X