How to build wealth through credible investments

Building wealth is a goal most people have, regardless of age.

Whether it’s buying a dream car, securing a comfortable retirement, or reaching life-changing financial independence, you need a combination of high-yielding income sources to successfully build wealth.

At the December edition of our Virtual Town Hall Meeting, we had a wholesome conversation about how to build wealth through credible investments.

Our guests, Ayodeji Ebo, Managing Director, Optimus by Afrinvest, and Financial Jennifer, founder of FinTribe, discussed the topic at length by sharing their expert perspectives and real-life experiences.

In our usual style, participants had the chance to seek clarity on grey areas. Here are some questions and answers from the webinar.

Q1: Does the interest rate of FGN Savings Bond beat inflation?

The coupon rate on FGN savings bonds varies from month to month depending on prevailing market conditions and the discretion of the Debt Management Office(DMO). For example, the 2 and 3-year November FGN savings bonds were issued at 12.429% and 13.429% respectively, whilst the inflation is at 21.09%. Similarly, the 2 & 3-year December FGN Savings bond was issued at 12.225% and 13.225% respectively. Therefore, we categorically say that the rate on the FGN savings bond currently doesn’t beat inflation.

Q2: How do I sign up for Afritrack?

Afritrack is an ancillary service we offer that allows clients to help them unlock the value of unclaimed dividends and recover lost shares. To sign up, kindly send an email to brokerageteam@afrinvest.com.

Q3: How can you get access to information about legal investment opportunities?

To get access to legal investment opportunities, kindly open an account with Afrinvest Securities Limited. You are guaranteed access to information on legal investment opportunities via emails every week.

Q4: How can you build wealth in a country like Nigeria with over 20% inflation?

To be candid, Nigeria with all its challenges boasts some of the best investment opportunities with optimal returns to investors. All that is required is to be disciplined, focused, and seek the assistance of a professional Wealth Advisor. Our Wealth Advisors with great depth of experience and professionalism would guide you in making the right investments to create wealth.

Q5: Which investment product(s) would you recommend for someone who intends to have 1 billion (capital plus interest) after 10 years, with an initial investment of 50 million Naira and an additional N150,000, bearing in mind that even though the return on capital is key, more important is the return on capital?

Great investment objective I must confess. What this implies is that the portfolio constructed must have an average annual return of 35%. Worthy of note, the higher the risk the higher the return. This naturally would mean taking calculated risks and constructing a portfolio that would comprise equities and fixed-income instruments.

Q6: How do I invest in foreign stocks? Is it profitable?

Investing in foreign stocks is profitable if you get your strategy right. That means buying the shares of companies with sound fundamentals and most importantly buying the shares when they are trading at a discount to take advantage of potential capital gains and secure potential profitability. Currently, Afrinvest does not offer the service, however, work is underway to allow us to commence offering the service in 2023.

Q7: I have my stocks scattered with different brokers. Please, how can I get it together?

We currently offer a service called Afritrack, which helps clients unlock the value of unclaimed dividends and recover lost shares. To sign up, kindly send an email to brokerageteam@afrinvest.com. We will guide and help you get them together.

Q8: What is the shortest trade time for a stock transaction? If you buy at #10 and the next day it goes #13, can you sell it within a day or two?

Yes, you can.

Q9: How liquid and easy is the FGN saving bond on the secondary market should you want to sell before the maturity date?

The liquidity of the secondary market depends heavily on the interest of the platform’s fellow investors. There is no guarantee that an investment placed for sale will be sold immediately.

Q10: What are legal investment opportunities?

They include Treasury Bills, FGN Savings Bonds, FGN Bonds, and Equities. Kindly send an email to brokerageteam@afrinvest.com to get started with any of them.

Q11: Is there any way Afrinvest can create a pool of funds to enable investors with low income to benefit from commercial papers since it is a big boys’ game?

Commercial paper is available for every investor. Kindly reach out to us to find out about available offers.

Q12: Do you give stock analysis (companies performance vs country’s economy vs price prediction and dividend expectation) and advice to your customers?

Yes, we do. Kindly sign up on www.afrinvestor.com to get weekly updates.

Q13: Do you have Islam-compliant plans?

FGN Sukuk Bonds are available for all Islamic investors.

Q14: Can you assist with the reactivation of a dormant CSCS account?

Yes, we can. Kindly send an email to brokerageteam@afrinvest.com to get started.

Q15: Is it possible to recover one’s late grandmother’s shares?

Yes, it is very possible. Send us an email at brokerageteam@afrinvest.com to get started.

Q16: Please can you elaborate on FGN Savings Bond? So, it is a minimum 5,000 Naira deposit. Do l need to invest this amount every month? If yes, how many months?

FGN savings bond are usually issued every month and opens in the first week of the month. The tenor of the bond is 2 and 3 years respectively. The minimum investible amount is N5,000, however, you could invest larger sums as you may require. Coupons are paid quarterly.

For instance, the FGN savings bond issue for December closed last week. If you invested in the 2 years tenor, maturity would be December 2024. However, in between, you would receive your quarterly coupon or interest.

Q17: Please can ETF be explained a bit to me and how it differs from direct stock buying?

ETFs are Exchange Traded Funds. It is a basket of well-chosen securities to suit a defined investment objective. It is just like a stock and can also be called a basket of securities (stocks, bonds, commodities etc.) that also trade on the stock market.

The beauty of ETFs is they help with portfolio diversification. It allows you to spread your risk because you have bought a basket of securities as against buying a single stock. For example, an ETF can contain ZENITH, GTB, DANGCEM & NEM. So when purchased with your N10,000, it means you have bought the four stocks rather than investing the entire sum in purchasing only Zenith or GTB or DANGECM. This helps hedge against market fluctuations.

Investors in ETFs do not directly own the underlying investments, but instead, have an indirect claim and are entitled to a portion of the profits and residual value in case of fund liquidation.

Q18: Does Afrinvest help with real estate investments? Where does real estate investment fall, is it high risk?

Yes, Afrinvest does help with Real estate investments. There are several factors to consider in determining whether an investment is a high risk. The risk categorization of a real estate investment is a function of the investment structure, transaction dynamics, character and competence of the issuer etc.

REITs (Real Estate Investment Trusts) are a good way to invest in Real Estate.

Q19: Please where do I start to invest with #10,000?

If your investment objective is capital preservation, Mutual Funds are a good place to start. If you can accommodate some risk, stocks and exchange-traded funds are recommended.

Q20: Knowing fully well that after COVID-19, a lot of companies have folded up and some are still finding things so difficult due to high operating costs, what is the fate of an investor that invested with a company which is duly registered with SEC with products listed on SEC website, but suddenly such company goes into extinction?

In such a situation, The SEC would usually transfer the assets of the moribund house to another firm. This usually obtains for registered funds (Money market funds or Equities Funds). This category of assets has Trustees and Custodians actively involved in the management of these funds.

Q21: I would like to ask how far back one’s outstanding dividends that have not been collected be recouped. Is there a peg?

The law says unclaimed dividends within 12 years can be recouped. Unclaimed dividends exceeding 12 years become statute-barred (i.e goes back to the books of the company).

However, the 2020 finance act passed into law states that unclaimed dividends not less than six (6) years would be moved into a Government Trust Fund. The law is currently under litigation thus enforcement has been stalled.

That’s a wrap! The full webinar recording is available on YouTube.

Remember, our goal is to simplify investments for you. A visit to our website will show you how we can help you reach your financial goals.

Till the next Virtual Town Hall Meeting, keep investing!

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