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First of all, What is investment?
According to Wikipedia, to invest is to allocate money (or sometimes another resource, such as time) in the expectation of some benefit in the future – for example, investment in durable goods, in real estate by the service industry, in factories for manufacturing, in product development, and in research and development.
Investors generally expect higher returns from riskier investments. Financial assets range from low-risk, low-return investments, such as high-grade government bonds, to those with higher risk and higher expected commensurate reward, such as emerging markets stock investments.
Also read: BEST ONLINE LOAN agents for start-ups in Nigeria
Investors, particularly novices, are often advised to adopt a particular investment strategy and diversify their portfolio. Diversification has the statistical effect of reducing overall risk.
There are few major ways one can invest in a country like Nigeria:
1. You can invest your money in Nigeria through quoted companies listed in the Nigerian Stock Exchange.
Many of the companies listed on the Nigerian stock exchange market are successful companies who seek investment from various people in order to be stronger and to have resources to win competition in their various industries.
When you acquire a certain numbers of shares in such a quoted company, you will then become a shareholder. This makes you an automatic “partner” to the owners of such companies.
You will be recognized (either by law or by people) as one of the owners of such company.
Advantage of this kind of investment is that, you are not going to be involved in the day to day battles of the business world as regard the company you invest in (except of course if you actually own a lion share in the total company`s shares)
You will earn your ROI (return on investment) and every other entitlements (if any) every year ended.
Note that the year ended of some companies isn`t December 31st. Some companies usually start their new business year in July 1st and end it in June 30th or start by April 1st and end it by March 31st the next year. There is no business law that says that a company must prepare their end of the year financial statements by December.
You have seen the advantage of investing in stock… you can earn 300%, 500& even 1000% Return on Investment (ROI) just by investing your money in one of the companies listed on the Nigerian Stock Exchange Market.
Wait! There are some disadvantages.
You can lose your money too.
This is not just about investing in Nigeria stock exchange market alone. This is not about investing in stock alone, in fact, this is about business and investing generally.
I have invested in personal businesses and failed terribly.
You can invest your money in your own business and lose everything, if you don’t know the language (strategies, tactics) of the business world, but you see, when it comes to stock market, you`re not in control.
Just as it sounds easy to make money just by investing in stock (no business headaches, nothing), it may sound unfair that circumstances beyond your control or understanding can lead to lose of your investment.
Think about 2008 economic meltdown.
Few years after then, I looked at the stock prices of some companies in Nigerian stock market I was familiar with and I pitied their shareholders.
I saw companies that were having their stock prices as high as #80, #100 before the global meltdown then having their stock prices as low as #5, #8.
What a terrible lose!
You can`t possibly control what happens to the world economy, can you?
You think about this.
The speech, action or even travels of Nigerian president can affect the prices of stocks at the stock exchange market (not Nigeria alone. It happens everywhere).
Now tell me, can you explain the reason why the price of the stock you bought would go up because Nigerian president travels to Australia and stays there for one week?
Why will the worth of your stock come down because Nigerian president travels to China and doesn`t stay long?
I`m sure some investment experts will know the reason behind this, but I don`t know.
I`m only saying this so as to reveal to you how your stock investment is not in your control.
Think about this.
There is a grievous lose in the stock prices for Nigerian (and international) investors who invested in the Nigerian stock exchange market some days before 2015 general elections and just immediately after the election, there was an unusual rise in the price of the stocks.
Why this fluctuation?
I didn’t know, until I heard an expert talking about it on the television.
According to him, most people were afraid that there may be civil war in Nigeria after elections, so they withdrew and withhold their investments, but just after there is declaration of the general election winner and there was no problem, Nigerian investors and their overseas counterparts rushed back to the market.
Since stock investment works in the normal business principle of demand and supply, the higher demand rate led to the unusual increase in the stock prices.
I`m not making this analyses so as to discourage you from investing in stocks. If I do so, then I’m not qualify to be who I claim to be.
I have told you before that business is a war. So is investing. It’s all about talking risk, fighting war and making money.
Investment in Business is a risk, But don't ever take a Blind Risk.
You wouldn’t want to say that because Stephen has inspired you that business is all about taking risk, then you will go straight tomorrow morning to go and invest #1 million in just any listed company on the Nigerian stock exchange.
No.
That`s not risk. That’s foolhardy.
Take smart risk.
The difference between blind risk and smart risk is the education, financial education. Business education.
Robert Kiyosaki loves to say, “Investment is not risky. Ignorance is risky”.
Take for instance, the worldwide economic meltdown that happened in the year 2008 (and affects the world till now) has been predicted by Robert Kiyosaki about six years before it happened.
I read his book where he predicted that woe in the year 2007 or so and it happened just a year after.
How can someone know what is likely to happen in the world economy?
Studies. Knowledge. Business education.
Knowledge makes you to see what others cannot see.
From my studies and insight, I know we are in trouble if we continue sending all our children to schools where they will brainwash them to love job. If you don`t see that woe, I see it.
Donald Trump wondered why he would see something (maybe a business opportunity or investment opportunity or a financial woe that`s coming) and 99.9% of people would not see it.
Starting business in Nigeria, Investing in Nigeria (or anywhere in Africa) isn’t risky, if you pay the price to acquire the business skills needed to make money through your business and investment.
Forget it. If you cannot learn, you cannot earn. If you learn little, you will only earn little.
The only exception to this is, if you’ll invest your money with someone who you’re sure knows much about how to make a business successful.
2. Invest in Real Estate Development in Nigeria.
If there is any less risky (not risk-free, friend) investment you can venture into, then that is real estate. The reason is this… the prices of properties rarely come down, especially in cities (like Lagos, Abuja, Portharcut)
In a country as populated as Nigeria (the 10th biggest country of the world), demand for land, living apartments, offices and shops will always be at increase.
That is one advantage of this type of investment.
But you see, there are two or three disadvantages too.
First, the investment in real estate is a long term investment. Your Return on Investment (ROI) doesn`t come as fast as other sectors of the economy you can invest in.
Take for instance if you invest in a building with 10 million naira in Lagos, you may not be able to make such money back in 5years.
Yes, you can continue to make money from such investment for 200 years (ho, sorry you cannot live 200 years on earth. Well, your children and grandchildren could be profiting from your investment after you`re gone).
Another thing you have to watch out for is that, you really cannot know how to invest in good location (or what makes a location really good), until you train your mind to see invisible opportunities.
If you ask an average man what a good real estate location is, he may tell you it`s a populated area where the rent is high.
The problem with this thinking is that, whenever the rent is costly, the land and cost of building too will be costly.
What if you could spot an area with low cost of land and building, but which (as you have used your financial mind to calculate) in the next few years, the property there will be gold?
What if you could learn how to locate properties some people are tired of, buy them and renovate them?
What if you could actually be smart with your real estate investment in Nigeria and Africa?
You can, if you care to learn by reading good books on the subject of real estate.
Donald Trump is a man that comes to my mind. He is a genius real estate man. He has written few books on the subject if you care to read them, search for them in bookstores or online.
3. Invest with friends, or in friends.
Maybe you are too busy with other things, or you think you are not smart enough to handle what may come up, there is when friendship comes in.
As you have been growing and meeting people over the ages, there will be quite a few that you can call friends. And if you can tell yourself the truth, you can be able to choose the ones worth investing in.
If it`s possible, let there be a solid business agreement. People change when money comes.
4. Invest in you, yourself.
So far we have discussed about how to invest in stock (through Nigerian stock exchange market), how to invest in real estate in Nigeria, how to invest with a friend or a business partner. Now, let`s check how you can invest in your own personal business.
You can invest to a business which is going to be yours. In this case, you`re the Alpha and Omega. You own your business and you`re responsible for it day to day running and progress of the business.
In the future you may have the need to take such company to public and sell part of its share, you will still be the major share older and probably the CEO.
Let me tell you this. You can excel with any kind of business provided you`re skilled in the art and science of business.
A business minded person is like a skilled soldier. A skilled soldier can fight with any weapon (or even snatch the weapon of the enemy).
To be a skilled entrepreneur, you must be a student of business. You have to learn how to be an addict reader.
5. Invest in Agricultural Sector.
Agriculture investment is a sector that can not be over-emphasized. Whether we like it or not, one day oil will not be the same as it used to be.
You can invest in this sector and then wait and hope for the rainy day.
6. Invest in Fish Farming.
People may not buy drinks, but they must buy fish.
Another plus to this investment is Nigerian government's strictness when it comes to importation of frozen foods.
This means that no matter what happens, you cannot lose, depending on how smart you play.
7. Snail farming.
8. Poultry farming.
9. Importation of wears.
10. Transportation business.
11. Bakery.
12. Restaurant.
13. Online Retailing.
14. Web designing.
15. Blogging.
16. Private school. (no matter how small)
17. Waste management company.
18. Hair dressing/ Barbing.
19. Anything you can think of, so far you are ready to pursue it.
Yes, you can venture into any business of your interest and make a lot of money out of it (even when most people doing such business don`t make money)
I think I know what I am saying. I have played for a while (not too long, anyway) in the game of business.
I know that a skilled business person or investor could turn sound to gold.
Advice for you young starter.
1. Focus on learning first.
A soldier really don`t need to worry about where to fight (because there is always battles all around the world)
A soldier never have to worry about weapons to use in the battle (because he can always get one or snatch that of his enemy)
But a soldier has to worry about his skills, his military skills and tactics.
There is this piece of masterclass written by the American real estate guru, Robert Allen. Allen claimed sometimes ago that if he was taking to anywhere in America, without a penny, he would buy a real estate asset.
Robert Allen was held to fulfill his claim. Everything was taken away from him and he was taken to a city he never knew he was going to be taking to.
Allen bought a piece of real estate property without a penny with him.
Robert Allen is known with his “nothing down” investment strategy. He believes that the number one thing anybody needs to be good investor is business education and investment skills.
If a soldier is truly skillful, he can never lack for weapon or the battle field to operate because there are battles everywhere in the world where skillful soldiers are needed and there are sophisticated weapons on ground for any soldier who can help win battles.
There are business and investment opportunities all around you in Nigeria and other part of Africa and there are resources to finance such investment too, but you need skills to learn how to see opportunities that are not visible to the physical eyes and the skills to get, gather and use resources in such a way as to get good return on your investment.
2. Choose what you love to do.
You cannot just invest in things you don`t have passion for. If you do so, you will fail.
Before you can make money through real estate investment, you have to love properties, constructions and stuffs like that.
If you want to invest in stock or bond, you just have to be a lover of them.
You cannot make money in the fashion industry if you are not passionate about clothing and fashion, no matter how much money you have to invest.
3. It's not a must you will start with all the millions you need.
The first time I invested in stock, I invested something less than #10,000. Yes, I didn`t make millions from that investment nor did I later become a stock investor, but I made a step forward.
Start somewhere. Acquire business skills. Invest and make money.
Start somewhere, and let the future decide. Don't sleep you young lion, the time is now.
Let's chase that dream!!
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