How to make your money work for you




When money realizes that it is in good hands, it wants to stay and multiply in those hands (IdowuKoyenikan)

What the quote is saying is that you can always make your money multiply if you invest it wisely and properly irrespective of the economic environment.

At this particular period that Nigerian economy is facing downward trajectory, high rate of inflation and harsh business environments, you can still decide not to be among the group of residents who complain and give excuses.

Do you know that as some are complaining about the economy on daily basis, some are smiling to banks every day. The latter group are the ones who only see the opportunities in the system and making capital out of it. To a large extent, this group has been able to protect their investments from inflation and other forms of economic shocks.

In this article, we will discuss how you can deploy the right strategies to make your money multiply and work for you in the face of economic hardships and unfavorable policies in Nigeria.

1. Make Your Financial Plan

Making a financial plan is the first thing you have to do if you want to deploy your money to that channel that will earn you more money.

 It is noteworthy that your planning goes a very long way to determine the success and life span of your investment. In fact, your financial plan is the pillar of your investment just as how a pillar holds a Storeybuilding.

A popular adage says he who fails to plan, plan to fail. A religious book also says that if a man wants to build a tower, he must first of all sit down to plan the cost of the proposed tower, otherwise, the project will fail.

A Poor or lack of financial planning will surely breed failed investment.

What is a Financial Plan?

To simply put it, financial planning is the act of estimating the capital needed to achieve your personal financial goals in life.

Financial planning is more than just deploying your funds for a particular projects or investment; it should be part of one’s lifestyles. Therefore, making a financial plan requires high rate of discipline.

If you hear the life histories of successfully investors in Nigeria and all parts of the world, they are the people who exhibit high degree of financial discipline and planning. Having a good financial plan means that you have firm control over your finances, meaning you are controlling the money, not the money controlling you. 

Therefore, if you want to make your money work for you, you have to draw a solid financial plan.

When your money starts working for you via a well-structured financial plan, you will have enough money to spend on the essential things on yourself and your family.

The economic upheavals and current high rate of inflation in Nigeria will have little effects on your life because through financial planning, you have wisely sent your money on errands to yield more money for you, thereby planning for the future.

2. Open a Fixed Deposit Account

Sizeable number of Nigerians don’t know about fixed deposit account.

Fixed deposit account is different from savings and current accounts because it is an investment account. It means that you are not just saving your money, but investing it (fixed deposit) with an agreed interest rate within an agreed time frame (tenor). The accrued interest rates vary depending on the bank.

For example, If I agree with Bank X to put N200,000 in my fixed deposit account for a particular period at an Interest Rate of 10% PA. So, at the end of the agreed time (12 months for instance), I will now have access to my money with an additional interest of 10% of my fixed deposit.

The investment time frame called tenor is usually with a minimum of 30 days and a maximum of 360 days. It should be noted that Fixed deposit account gives you the advantage to terminate your investment before the agreed period.

Having a fixed deposit account provides a higher interest rate compared with savings and current accounts. Another advantage of fixed deposit is its flexibility, as you can open it with different banks offering different systems.

Operating a fixed deposit account with Wema Bank and GTB yields interest of 3% within 30 days. It yields interest of 3.25% within 60 days in Wema Bank. In Access Bank, within a tenor of 30 days, fixed deposit provides you interest of 4 %, in 60 days 4.35% while you get interest of 4.5% in 90 days.

Sterling Bank offers you the highest interest rate for fixed deposit in Nigeria. You get returns of 5 % of your investment within 30 days and 5.25 % within 60 days and 5.5 % within 90 days. Those are the three banks that offer some ofthe highest interest on fixed deposit in Nigeria, but you should do your research & select accordingly.

3. Consider Investing Your Money
There are various Instruments & Asset classes which you can choose depending on your risk profile

  • Stock Market

If you want to make your money work for you, the Nigerian Exchange Limited (NGX) is another fertile ground for you.

Investing your capital in the stock marketsis not as complex you think, but you need to choose the stocks wisely.

A beginner who wants to invest there can acquire securities directly from the primary market which can be done anytime that there are new offerings by issuers. You can also trade in existing listed securities through secondary market platform.

If you are interested in the opportunities of stock market, you will first buy securities in the primary or secondary market.

You will also be mandated to choose a stockbroker who is a registered Trading License Holder withNGX, who will help in facilitating opening of your Trading account.The documents required in opening a trading account with NGX must meet the regulatory Know-Your-Client (KYC) requirements.

Like other investments, investing in stock market has its own risks, that is why you need to conduct proper research on the stocks you want to buy. You can get the information from the broker’s website. Vital inform is a key.

  • CFD Trading

CFD (Contract for Difference) trading involves speculations on the changes in value of underlying asset which can be forex, stocks, commodities etc.

You make profits if the market moves in the predicted direction but if it goes against your direction then you make a loss.

Although it is flexible and requires little capital but the risk is extremely high and it is unregulated in Nigeria. CFDs can be traded via top-tier regulated forex brokers in Nigeria that offer CFD trading,and some of the popular brokers include FXTM, HotForex, OctaFX&Exness, and these brokers are regulated with foreign regulators.

  • Mutual Funds

The is another golden opportunity to make your money work for you. It is one of the well-known channels to build wealth and meet your needs without hassles.

Mutual funds can be simply describedas a “pool of money contributed by different investors and are managed by an individual or an Investment Fund Manager”. To simply put it, it serves as a system where cash are pooled from different Investors with a view to investing in bonds, shares, and so on

We have two types of Mutual Funds.

They are Open-Ended Funds and Close-Ended Funds. Open-Ended Funds are not traded on Nigeria Stock Exchange. This Fund doesn’t have limit on the number of shares issued. Close-Ended Fund is a sharp contrast to open-ended fund. There is a limit to the number of shares.

Mutual Funds are registered with theSecurities and Exchange Commission (SEC) and can be traded on the NGX.

In Nigeria,there are popular Mutual Funds such as: Legacy Equity Fund, ARM Discovery Balanced Fund, New Gold ETF and many others that an investor can choose from.

  • Federal Government Bonds

The Federal Government of Nigeria in its bid to sources for funds to finance viable projects in the country issues bonds in form of debt securities through a government agency known as the Debt Management Office (DMO) that will pay the bondholder (investor) both the principal and the interest at the agreed period (maturity of bond).

Being a Federal Government’s bond, stakeholders have rated it as the safest means of Investments in the domestic debt market because it has no history of default and it is risk free

4. Consider Investing in Business or Start-ups
You can invest your capital in running a side business, or work streams that can bring passive income.

For example, some of the opportunities that you can look into include Rental Income if you have enough capital to buy a land/building. Or you can start your Online storeetc.

Or you can invest in startup companies if you have enough capital. With this you have the opportunity to invest in high growth companies for the future.

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