A lot of us have made ourselves believe that making an investment is for high-profile people or high-income earners.
“I will start investing when I have enough money.”
Ladies and gentlewomen, it is about time you start putting your money where your mouth is because that N5,000 sitting in your account is the ‘enough money’ you have been waiting for to start your investment journey. Here are 5 ways to invest with a minimum of 5000 Naira.
You can thank me in the comment section ;).
1—Wealth Management Applications
I mean, how cool is it that you are one swipe away from saving and investing your money? With online applications like Piggvest and Cowrywise, you can invest with a minimum of N5000.
On Cowrywise you can invest in mutual funds through a Systematic Investment Program which allows you to invest little by little at intervals. Piggyvest on the other hand has a feature called Investify which allows you to invest in fixed-income investments and other yielding projects. The risk potential of these investments is relatively low or medium, so you can rest, assured that the returns will be stable. These applications offer great interest rates, the lowest rate being 10% per annum on both platforms.
So why don’t you get your investing on with one of these applications? Crowdyvest is also a great platform but you would need at least N20,000 to make an investment.
2—The Stock Market
If you thought the stock market was for big shots, think again. With as low as 5,000 naira you can start investing in stocks and receive returns in three ways; cash dividend, capital appreciation and bonus issues.
All you have to do to get started is choose whether you would like to invest in listed securities or unlisted ones. I’d say you should go for publicly listed equities on your first go but if you decide otherwise, that is still fine. The Nigerian stock market is organized by two organizations; The Nigerian Stock Exchange (NSE) which is the first and major stock exchange in Nigeria, where publicly listed equities are traded and The National Association of Security Dealers (NASD OTC) which provides a regulated platform for the trading of unlisted equities.
Once you decide on what type of security you would like to invest in, choose an approved stockbroker from one of the many stock brokerage houses in Nigeria. The list of these houses is available on the website of the Nigerian Stock Exchange. Reach out to one of the approved houses on the list and make inquiries through the contact details provided. Although the operations of brokerage houses in Nigeria are guided by standard rules, it’s important you find out the internal policies of the firm you decide to invest with. The next step after doing this is setting up a brokerage and CSCS account, you will be required to submit some documents to open these accounts.
This is just a compressed guide to investing in the Nigerian stock market, make sure you go the extra mile and do detailed research on this to have a better understanding. Also, Bamboo is also a great and simplified way to invest in the Nigerian and foreign stock market, all you need to do to get started is download the app and set up an account.
After you set up these accounts, you may proceed to research on what stock you would like to invest in. There are research firms that you can contact to assist you in choosing the right stock. The Nigerian Stock Exchange also provides ample data services that you can subscribe to and stock brokerage houses also offer these services for free to their clients. Once you have decided on the equity you would like to buy you can now fund your account with the brokerage firm you have chosen, after you have done this, you would have to give your trade mandate. You can download the mandate form from your brokerage firm’s website and fill it. Once you have done this, you can send it back to the broker to be implemented. You will be sent a contract note, showing the amount of stocks you have bought, statutory charges and broker commission.
3—FGN Savings Bond
The FGN savings bond was devised by the federal government of Nigeria after the minimum amount required to invest in its biweekly treasury bills auction was raised from N10,000 to N50 million in March 2017. The Savings Bond is issued by The Debt Management Office (DMO) on behalf of the Federal Government of Nigeria. The objective of this bond is to encourage low-income earners to take part in the debt market.
In the first week of every month, the savings bond is issued for a two-year and three-year tenure. The last bond issued, attracted an interest rate of 1.759% and 2.759% respectively. Although the interest rates aren’t as good as they used to be, the FGN savings bond is also a great avenue to get returns on your money; it can even be used as collateral to get a loan from a bank. The major downside to investing in the FGNSB is the chance of losing the value of your investment to inflation but other than that, this investment is almost risk-free. You can invest in the FGN savings bond with as little as N5000.
To invest in this bond you would have to acquire the service of a stockbroker.
4—Money Market Instruments
Money market instruments like regular bank savings is an easy way for average individuals to partake in investing, the first thing you need to do is identify the bank that offers the best interest rate.
With just N5000 you can invest in the above money instrument. There are other instruments like treasury bills, commercial papers, fixed deposits and banker’s acceptance but they require a larger amount of money to start investing.
5—Digital Agriculture Platforms
Digital platforms like Farmcrowdy, Thrive Agric, Farm4me, HelloTractor, VirtualFarm and so on, have made it easy for us to invest in farming and reap returns of up to 50% per farming cycle. These platforms provide an array of farm projects that one can sponsor with zero hassle.
The key to a successful investment journey is being patient. Starting out with small investments can be an eye-twitching experience, especially when the ‘measly’ returns start rolling in. Now remember, if an offer sounds way too good to be true in the investing scene, then it most likely is. The aim of these investments is to compound interest— that is to make interest on interest already earned. The earlier you start and the more consistent you become, the better for you. Lastly, don’t forget to diversify. All your investments should not be in one sector area of the economy.
I wish you all hearty good luck on your journey to wealth!
