Where To Invest Money For Good Returns In Nigeria?

October 04, 2021
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No matter how much you earn currently, it is important to invest a small proportion for sustainable financial growth. If you spend everything you earn, you can never grow financially.

Saving is only the preliminary step towards financial independence. How you are treating your savings is of utmost importance.

If you keep your savings in cash, you are exposing it to a high risk of inflation. The value of your money would depreciate with time. To keep up the buying power of your savings and to increase their value with time, you need to invest them. Good returns in investment come with differing risk factors.

The majority of the newcomers in the investment world seek instruments providing the highest returns at the lowest risk. However, choosing an investment avenue is not that simple. Knowledge of the investment avenues and experience are keys to excel in the investment world.

Each investment tool carries different risk factors and is ideal for different types of investors. Risk appetite, investment tenure, and financial objectives must be considered while selecting an investment tool.

We have segregated and explained the available investment instruments in Nigeria to assist the retail investors.

Investment Options with Lowest Risk

Low-risk Investment tools are the instruments that provide stable returns over investment amount at little or no volatility.

The returns are not much affected by the market trends but can be lower than the inflation rate at times.


Debt, bonds, or fixed-income securities are issued by entities to raise capital. These entities can be government, banks, corporates, etc. The issuer sells the bond and promises to repay the principal amount along with the interest after predefined tenure.

The issuer can also make payments at regular intervals called coupons. In zero-coupon bonds, the repayment is done at the end of the tenure. Details like interest rates, coupon, tenure, credit ratings, and conditions of the bonds must be checked before buying.

In case if the issuer fails to repay the promised amount, it is called default. Bonds issued by federal and state governments are less likely to default as compared to corporate-issued bonds. Hence, government bonds have high credit ratings but generally provide lesser returns compared to corporate bonds.

Nigerian investors can check the details of available bonds, and invest in them through any of the dealers on the FMDQ OTC Trading Platform or through dealers on Nigerian Stock Exchange.

Fixed Deposits

Fixed and regular deposits are another low-risk mode of investment. A fixed amount is deposited in the licensed banks that pay interests on the principal amount.

Different banks offer different annual interest rates. Forex: Banks in Nigeria offer between 6-14% interest rates with Fixed Deposits. The interest rates depend on your amount & the time frame is generally longer for higher rates.

You can contact your bank directly to inquire about the details and invest in fixed deposit schemes.

Where to Invest for Medium Term Good Returns?

To get slightly higher returns than fixed income securities in moderate to long tenure, the following options can come in handy.

These instruments have historically provided better returns for a duration of more than 3 years. However, they also carry higher risk factors.


Stocks are the most common mode of investment where you buy and sell shares of a listed company. Owning shares of a company makes you its part-owner and the price movements of shares depending on the growth and fall of the company.

Investors can buy and sell shares of a listed company through any of the NGX licensed brokers. Currently, there are 155 listed companies on Nigerian Stock Exchange. Each broker offers different features and can charge a different fee as a brokerage for the offered service.

Stock investments can generate attractive returns over the medium to long term but it involves risk. Investors need to do their research and thoroughly analyze the stocks before making an investment.

Mutual Funds

Mutual funds are the pooled investment tools where collective funds from several investors are invested in conventional instruments like stocks, bonds, etc.

These are suited for passive investors who do not fully understand the stock markets & other markets but want to invest.

Actively managed mutual funds are managed by a professional fund manager and incur slightly higher fees. The passively managed mutual funds or exchange-traded funds (ETFs) are not actively managed by a fund manager.

Nigerian investors can invest in mutual funds through SEC licensed mutual funds. Investment can be done on regular basis called a Systematic Investment Plan (SIP) or lump sum.

Each fund has a different risk factor, portfolio, returns objective, etc. Investors must check the suitability of the fund before choosing it. Most funds list their performance over the years & you can check it before investing.

High-Risk High Return Investment Option for Experience Investors & Traders

Those investors who seek returns in short term generally need to take higher risks to achieve their objective.

Instruments under such criteria are generally classified as risky & only suited for Experience investors. Beginners must avoid these instruments.

Short-term buying and selling of securities are called trading which is a high-risk method to make profits through capital markets.


Derivative instruments are short-term investment tools with high risk. These instruments derive their value from conventional capital markets like stock, commodities, indices, etc.

Futures and options are the most commonly traded derivative instruments. These are contracts that give the right and obligation to buy and sell underlying securities before the expiry date.

Derivative instruments involve high risk and are suited for professional and experienced traders.


Forex or foreign exchange refers to buying and selling one currency for another. Traders normally trade currencies like EURUSD, GBPUSD etc.

Online forex trading is not yet regulated but it is not illegal in Nigeria. There are estimated to be over 200,000 forex traders in Nigeria, which is the highest in Africa.

Nigerian traders trade forex with foreign forex brokers that accept traders based in Nigeria & all of these brokers are regulated & licensed by foreign regulatory authorities like FCA in the UK, FSCA in South Africa. There are no CBN or SEC licensed forex brokers in Nigeria.

Currency pairs are traded in lots where 1 standard lot size represents 100,000 units of a currency. Forex brokers offer leverage which allows retail traders to trade higher positions, but it also brings very high risks.

The forex market is active 24*5 throughout the world. The price movement in currency pairs can occur due to multiple reasons which can be difficult to predict. New traders are advised to trade forex through demo accounts to gain decent experience, and avoid investing any real money.

CFD Trading

Contact for Deposit (CFD) is a type of derivative market where only the price movement of underlying securities is speculated. Traders can trade CFDs on forex, indices, commodities, stocks, cryptocurrencies, etc.

Currently, there are no licensed CFD brokers in Nigeria for retail traders. Traders in Nigeria trade these instruments with foreign licensed brokers.

CFDs allow convenient trading on instruments that might not be available to common investors in Nigeria. Leverage can be used to open a bigger position with a small deposit. But it is not suited for traders who are inexperienced.

The risk factor is high and it may not be ideal for conservative investors & traders.

Bottom Line

There are plenty of financial instruments available in Nigeria. Investors should not go straight for the highest return generating instruments. Each element of risk concerning the investment objective must be considered before selecting an instrument.

Investors should not rely on suggestions from friends or relatives for investment decisions. Investors must cut the noise and spend their time and effort learning about capital markets according to their suitability.

Oct 15, 2021 at 10:07 PM
Nov 20, 2021 at 11:08 PM
Nov 21, 2021 at 02:48 AM
Go forex
Mar 24, 2022 at 11:57 AM
This is a good idea
Mar 24, 2022 at 12:32 PM
Have they done it now ?
May 04, 2022 at 07:25 AM
Good idea