…Equities, fixed income seen yielding high returns
In Nigeria’s current economic situation, allowing money to remain idle is a luxury only a few can afford.
From equities to fixed income securities and alternative asset classes, here’s a closer look at recommendations for maximising returns on N10 million.
Broadly, there are three major investible instruments: equity, money market, and fixed-income securities.
Though there are established investment rules, investing isn’t a one-size-fits-all.
Analysts say potential investors must consider their investment objectives, risk tolerance, sources of funds and age before betting on stocks, bonds, treasury bills (T-bills), exchange-traded funds, foreign exchange, and even cryptocurrency.
Equities vs fixed income
Olumide Sole, head financial institutions research, Renaissance Capital Africa, said younger investors who have more appetite for risk can allocate (70 percent) about N7 million in equities and 30 percent in fixed income and vice versa for older investors.
“To further diversify one’s portfolio, you can also look at putting five percent in crypto currencies and real estate,” Sole said.
In 2024, the Nigerian stock market’s All-Share Index (ASI) yielded 37.65 percent returns. So far this year, it has performed negative 0.5 percent.
However, the hawkish stance maintained by the monetary authorities spurred an uptrend in yields in the Nigerian fixed-income market in 2024. The yield on the one-year treasury bills peaked at 30.7 percent in November 2024 but has since declined to 29.21 percent as at the last primary auction.
Proportional investment
Gbolahan Ologunro, portfolio manager at FBNQuest, said ordinarily for a risk neutral investor, the allocation should be 50 percent equity and 50 percent equity.
However, Nigeria’s macroeconomic challenges do not allow much return from the equities market, he said, recommending a 60 percent (N6 million) allocation in fixed-income markets and 40 percent (N4 million) in equities for a neutral risk investor.
“I think the attractive yield on the fixed income market will continue to provide decent and stable returns. On equities, the market is still not that positive, but I think investing in banking stocks, in corporate actions, should support better price performance for banking tickers,” he said.
“I think investing in the telco space as well is good. The cement space should also remain relatively stable in all improvements,” Ologunro noted.
He said for the fixed-income market, the money market fund is the best way to go as it helps the investor to preserve his or her capital and earn a quarterly dividend.
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“To hedge against currency devaluation, you can allocate 40 percent of the fixed income allocation (N2.4 million) by investing in SEC-registered mutual funds, some of which have a low investable amount of $100. The remaining N2.6 million can be invested in local money market funds, or treasury bills, ” Ologunro further said.
A money market fund is a type of mutual fund that invests in short-term debt securities. It includes T-bills and corporate bonds. Their interests are paid quarterly.
Retail investors can invest in treasury bills through the secondary market, which is offered by many investment firms. For Afrinvest Securities, its minimum subscription for NT-Bills is N100,000.00.
Medium to high risk appetite
Jennifer Awirigwe, a certified financial instructor and stockbroker, explained how a young person with a medium-to-high risk appetite can invest in 2025.
“Invest 40 percent of your fund in stocks, 20 percent in Exchange Traded Fund (ETF) such as VOO, HACK, and 10 percent in quality crypto coins such as BTC, BNB,ETH and SOL,” she said.
For liquidity, she advised investors to bet 30 percent in an interest yielding savings account.
“You can put it in treasury bills and get paid interest. It can be terminated before maturity if the need arises.”
In its 2025 Economic Outlook report, CardinalStone broad asset allocation suggested a larger portion of the investment be allocated to Nigerian assets (65 percent) compared to global assets (35 percent).
With the highest allocation, 45 percent should go to Nigerian equities while the rest goes to the global equities market.
It said that while fixed income makes up a significant portion of 40 percent, most of it is allocated to Nigerian bonds (25 percent) with a smaller share in global bonds (15 percent).
Only a small portion (8 percent) is allocated to real assets and alternatives like real estate, infrastructure, or commodities. A small percentage (7 percent) is kept as cash for flexibility and potential tactical investment opportunities.
Nathanael Disu, investment research analyst, Afrinvest Consulting, said high-risk investors must consider cryptocurrency and real estate as better options.
“Cryptocurrency is the new kid in the block. With this, you get to invest/trade in digital currencies such as Bitcoin and Ethereum. Also, buying lands and properties is an age long asset class that has been existing since time immemorial.”
