7 Short Term Investments In Nigeria For Youths
Lolu was projecting towards doing his master’s degree in a year’s time. He had some cash on him but knew it would not completely meet his needs in his first year. He was really at a crossroads on what to do with the money. He wondered if he should buy a piece of property and exercise patience for its appreciation, but he knew that it would take years. A few weeks later, he bumped into Jide who told him how he raised legitimate funds, within a year, to kickstart his now thriving business.
To invest, according to Wikipedia is to allocate money in the expectation of some benefit in the future. An investment is akin to saving for the rainy day, but with extra benefits attached which could be profit.
According to Investopedia, short term investments are securities that can be converted to cash within a period of six months to one year. They are also seen as liquid assets, which are programmed and ran to provide a temporary resting ground for excess cash or loose cash. Short term investments are also known as marketable securities or temporary investments. Unlike long term investments, which has been said offers a higher profit or yield over time. The risks involved in short term investments are less than long term investments.
Short term investments in Nigeria
There are a whole lot of examples of short term investments.
1) Treasury bills
Treasury bills are debt securities or government bonds, that mature in less than one year. They are affordable and are rushed by investors. They have proven over time, to be one of the best short term investments in Nigeria. They are sold by financial institutions, an example of which includes banks. They can also be sold by brokers.
Treasury bills are also used by the government to help finance national borrowing requirements. The bills are sold or given at a discounted price. It differs from treasury notes or treasury bonds. Treasury bonds are also debt securities but have a period of maturation of over ten years.
The maturity of treasury notes is from 2- 10 years. At the end of the period, it can be returned with interest or reinvested for more profit. One of the mouth-watering benefits of Treasury bills as a short term investment in Nigeria is that the interest received at the end of the agreed tenure is not subject to tax.
Other benefits of Treasury bills as a short term investment in Nigeria is that the bills can be used as collateral to buy more transactions, the interest and tenure of maturation are according to the preference of the customer.
2) Money market accounts
Money market accounts are accounts in banks or credit unions which are high-interest yielding. It is also known as a money market deposit account and is an example of a short term investment in Nigeria. Money market accounts differ from the traditional savings account in banks in the following ways viz
- The account pays a higher interest rate.
- It includes the privilege of debit cards and checks writing.
- They are not as flexible as other accounts because they have restrictions meted on them.
- Money market accounts are insured.
Inquiry about the account and other information can be accessed by visiting a bank.
3) Online investment or savings apps
This is a great idea for a short term investment in Nigeria. It is preferred by people because of the ease and flexibility that comes with it. The world is being overtaken by technology and is making a whole lot of things easier.
A great example of an online or investment app is Sumotrust. Sumotrust is a digital saving and investment platform that allows for ease in saving money. It helps one achieve financial integrity better and hence meet financial goals or targets.
It automates your savings and has flexible savings options. You can transfer money using sumotrust. More importantly, it is the most secure digital savings platform in Nigeria.
Related: Top 10 online savings platforms in Nigeria in 2020 with high interest rate
Sumotrust offers really high-interest returns, absence of hidden charges, and fees, unlike some banks. It also broadens one’s horizon as an entrepreneur or just an average individual by allowing one to connect with other entrepreneurs of like minds and also partner with trusted brands. There are four different types of accounts available. The accounts include the Main savings account, fixed savings account, mission savings account, and Sumotrust High-Interest Fixed Deposit Account (SHIFDA). Visit sumotrust for more information.
Check out why sumotrust is just ahead of others.
4) Fixed savings deposit account
A fixed savings deposit account is a form of short term investments available in Nigeria. It is an investment account offered by banks that has a stipulated amount of money paid into the account with an agreed interest rate and time, after which the money can be liquidated and collected with accrued interest or reinvested/ rolled over.
Some features of the fixed savings deposit account include
- The investment period of 30 days and a maximum of 360 days.
- An account can be opened only with a minimum of N100,000
- Termination of account before maturity is feasible but interest will be forfeited.
- An account can be terminated whenever the customer pleases.
- Individuals or corporate bodies or associations are eligible for the account.
- It offers a high-interest rate.
More information on the technicalities of this account can be gotten from the bank.
5) Certificate of deposit
This is an agreement between an individual and a bank. In exchange for a high interest, higher than a money market account, an individual can decide to enter an agreement with the bank. The bank uses the money for a period of time and high interest is reached which is paid to the individual.
This is an ideal short-term investment in Nigeria. It is sometimes referred to as a type of savings account, but without the option of withdrawal. It differs from the regular savings account in the following ways.
- The minimum deposit required is higher than that of a savings account.
- A penalty is paid for withdrawals pre-maturity. Legitimate withdrawals are only made post maturity.
- There’s no room to add more money after the deposit has been made.
It is worthy to note that the longer the length of the term the more the rate of interest generated.
6) Buying foreign currency
Buying foreign currency can also be seen as a short term investment in Nigeria. A rise in the market value of our local currency determines the amount of profit that can be made. This method can be dicey and is associated with risks of buying fake currency and a host of others.
With the rate of inflation and devaluation of our local currency, saving money is not just enough. Investment has become the real deal. Short term investments are even better ways to meet targets faster.
Cryptocurrency is one of the short- term and long-term investments for youths in Nigeria. It has proven to be very effective in making millionaires in this part of the world. So many startups have sprung up from crypto. You can either buy and hold, mine or trade. More on Cryptocurrency and blockchain will be coming up on the site soon.