How to Start Investing as a Nigerian in 2023

The best description of an investment is in the fact that it grows like a tree and yields fruits in due seasons. The greatest investment you can make is in yourself. So, invest your time to acquire skills and knowledge that will make you valuable and increase your earning capacity. You can do this by following some valuable twitter and instagram accounts e.g. kolonigeria, moneyafrica, wealthmotley, @The_MMW, Kalu Aja, Ray Dalio etc.

You need to know how micro economics works, policies and regulations especially in Nigeria. You need to understand the basics of inflation, devaluation  and how they affect your personal finances.

Follow the news, especially the host country of your investments.

 

Read: How to Live a Debt-Free Lifestyle

Invest in self-education via the internet (Youtube, Google podcast, Coursera), through books( The little book of common sense investing, intelligent investor, Psychology of money, Rich dad Poor dad, Unshakable, Atomic habits etc.)

1. Track Your Expenses

What you cannot measure, you cannot grow. Go through your transaction statements critically. Work with a budget. You can use an app called Money manager and follow the 50-30-20- rule for budgeting.

2. Have a FIRE 

Have a FIRE (Financially Independence Retire Early) number in mind. This is usually your annual expenses can be 25 or 35. This number needs to be in a long term investment for you to retire early.

3. Build an Emergency Fund

As you grow your earnings, start building your emergency funds(i.e. 3-6 months of your monthly expenses). This is not your savings, it's an emergency fund. So put it in a place that is easily accessible e.g. Kolo nigeria, Piggy flex, O wealth and earn interests on it.

4. Invest in Assets

The process of investing in assets starts with your focus on value. There was this documentary featuring Bill Gates and his wife, Melinda. In that interview, Melinda said something that struck in the sense that " Bill didnt start out wanting to be a billionaire". Instead, he focused on value and the money followed and that's exactly how it is for assets. There are several assets to invest into; Real estate, stocks(local and foreign), Eurobonds, Fintech apps etc. If you are looking for a long term investment with consistent yields and a well-diversified portfolio, put your money in an index fund with low expense ratio like VOO. You should also invest consistently with a specific amount each month and let the power of compounding take charge as discussed in the point below.

 

5. Give it Time

Allow your investments to compound. You see, the beauty of investment is in the compounding effect. Those little additions of 5% this month, 3% next month and 15% in the third month all amount to something bigger. If you have ever had to use the "little drops of water make a might ocean" saying, you can use it in your investment. Whether you are a baby investor or an expert, the rule is to give it time and never rush the process. Sustainable wealth is built gradually.

Finally, remember all things take time to build. Building the right habit early is the most important part of the process.