What Is Investment? Let’s Break It Down

You have probably heard the saying that money does not grow on trees. For most people, it is just a saying, a reminder that life is expensive and money is limited. But for Dare, a twenty-eight-year-old salary earner living in Lagos, those words became a challenge he was determined to overcome.

Dare stumbled upon the idea of making his money work for him one quiet evening while scrolling through an article about building wealth and retiring before forty. At first, he rolled his eyes. He had seen articles like this before, always ending with some pitch to sell a “secret.” But something about this one felt different.

The article spoke plainly, without exaggeration. It explained how to invest in your future, let your money grow on its own, and create a steady stream of income. Dare read it twice, then a third time, and that was the moment everything changed. From that day on, he started thinking differently about his salary, his savings, and his future. That single article reshaped his thoughts on investment, and the lessons in this article could do the same for you.

So, What Exactly is an Investment?

Imagine a farmer planting a single orange seed. With care, patience, and attention, that seed grows into a tree with fruit. The oranges can be sold for profit or enjoyed at home, but either way, the value of the seed has multiplied many times over. Investment works the same way. It is the money you put into something with the expectation that it will grow into something far greater than what you started with.

Investments can take many forms. You might buy land, jewellery, stocks, or even shares in a company. There is no single “right” way to invest, but the key is to choose an approach and give it time to grow.

Investing can feel intimidating at first. You might ask yourself, why is it necessary? Can I really grow my money this way?

The answer is yes. Investing is not optional if you want to build lasting wealth. It is the path from working for money to letting your money work for you.

And Here is Why You Should Start Investing Today.

1. It Helps You Build Wealth Over Time

Think of someone who bought a plot of land in a developing area years ago. Maybe it was an abandoned bushy area then. But today, there’s a new road, shops, and houses everywhere. The same land that cost a small amount back then is now worth 10 times the original price. That’s investment doing its job.

2. It Helps You Keep Up with inflation

You’ve probably noticed that the price of almost everything creeps up little by little. Investing helps your money grow in a way that keeps up with those changes. Instead of your money losing value, it gains.

3. It Gives You Returns That Support Your Goals

Your investments can pay you in different ways:

• Interest from treasury bills, bonds, or fixed-income plans

• Dividends from shares

• Rental income from real estate

• Capital gains when something you bought increases in value
  
  These returns are like small boosts that push your financial goals forward.

4. It Helps You Reach Big Goals Faster

Big goals like buying a home, planning for your children’s education, expanding a business, or retiring comfortably can feel overwhelming when you rely only on income or savings. But with investments, your money is also contributing to the journey. It’s not just you working; your money is working too.

So What Type of Investment Should You Consider?

Now that you understand why investing matters, let’s look at where you can actually put your money. 

1. Stocks (Shares)

Stocks, or shares, are one of the most popular ways to invest, and for good reason. When you buy a stock, you’re buying and even owning a tiny piece of a company. If that company grows, earns more, or pays dividends, you get to enjoy part of that success.

In Nigeria, you’ll find these companies listed on the Nigerian Exchange Group (NGX): banks, telecoms, FMCG brands, oil and gas companies, manufacturing firms, and even some tech-driven businesses. The idea is simple: if these companies do well over the years, the value of your shares can increase too.

Why choose stocks?

• They offer strong long-term growth potential.

• You can earn dividends, which are portions of a company’s profit shared with shareholders.

• Stocks can be bought or sold through licensed stockbrokers or regulated investment apps.
  

Important to know:

Stock prices don’t stay in one place; they rise or fall based on how the company performs and what’s happening in the economy. This is normal. That’s why stocks are better for long-term goals, not quick profit.

2. Fixed-Income Investments

Fixed-income investments are great if you want steady, predictable growth without too much drama. Here, you’re basically lending money to the government or a company, and they pay you back with interest. It’s simple, stable, and one of the easiest ways for beginners to start investing.

In Nigeria, fixed-income options include:

A. Treasury Bills (T-Bills)

Treasury Bills are one of the safest and most accessible fixed-income investments in Nigeria. They’re short-term loans you give to the Federal Government through the Central Bank of Nigeria (CBN). In return, you earn interest upfront, and at the end of the tenor, you receive the full value of your investment.

For example, if you buy a ₦100,000 T-bill at 10% for one year, you instantly get ₦10,000 as interest. The government keeps ₦90,000 and returns the full ₦100,000 to you at maturity. Simple, predictable, and low-risk.

Why people choose Treasury Bills

• They’re government-backed, so they’re considered very safe.

• You receive interest upfront, which many investors love.

• There’s no guesswork as returns are fixed and clear.

• Tenors are short (91, 182, or 364 days), so your money isn’t locked for too long.
  

Let’s break it down a bit. For instance, if someone invests ₦200,000 in a 364-day bill at 11%, they receive ₦22,000 immediately. At the end of the tenor, they get the full ₦200,000 back.

You can buy T-Bills in two ways: the primary market and the secondary market.

i. The Primary Market (Directly from the CBN)

This is where Treasury Bills are first issued.

• The CBN sells T-bills through auctions called Primary Market Auctions (PMAs).

• Investors submit bids (either competitive or non-competitive).

• The government decides the final interest rate based on demand.

• You can access this market through your bank or a licensed financial institution.
  

Who it’s best for:
People who want the most competitive rates and are willing to wait for auction dates.

ii. The Secondary Market (Buy Anytime)

This is where Treasury Bills are bought and sold after they’ve been issued.

• You buy existing T-bills from other investors.

• The price and yield may differ slightly from the original auction.

• Trades happen daily through banks, brokers, and regulated investment apps.
  
  

Who it’s best for:
People who want quick access without waiting for the next auction.

B. Federal Government Bonds

Federal Government Bonds (FGNs) are long-term loans you give to the Nigerian government. Unlike Treasury Bills, which are short-term, bonds can run for several years: 2, 3, 5, 10 years or more. They pay semi-annual interest, meaning you receive a steady stream of income twice a year.

Think of bonds as the “longer, calmer sibling” of T-bills. They’re still backed by the Federal Government, so they’re considered very safe, but they run for a longer period and offer higher interest rates.

For example, if you buy a ₦500,000 FGN bond at 14%, you get ₦35,000 every six months, and at maturity, the government returns your full ₦500,000.

Why do people choose FGNs

• They pay a steady income every six months.

• They offer higher returns than Treasury Bills.

• They’re backed by the Nigerian government, making them low-risk.

• They’re great for long-term planning (education, retirement, etc.).
  
  

How to Buy FGN Bonds

Just like T-bills, you can buy bonds in two ways:

i. The Primary Market (Through the DMO Auctions)

• The Debt Management Office (DMO) issues FGN bonds monthly.

• Investors bid for available maturities.

• Rates are determined at the auction based on demand. You can participate through your bank or a licensed broker.
  
  

Best for:
People who want competitive rates and don’t mind waiting for monthly auction dates.

ii. The Secondary Market (Anytime, Through Brokers)

• After bonds are issued, they can be bought and sold daily.

• Prices may be slightly higher or lower depending on demand.

• You access this through your bank’s treasury department or regulated investment platforms.
  
  

Best for:
People who prefer instant access without waiting for auctions.

C. Commercial Papers (CPs)

Commercial Papers are short-term loans issued by credible companies that need quick funding for things like operations or inventory. When you buy a CP, you’re basically lending money to that company for a short period, usually between 30 and 270 days, and they pay you back with interest.

Because CPs are issued by top-rated companies (such as banks, telecoms, or FMCG giants), they offer higher interest rates than Treasury bills while maintaining a solid safety profile when the issuer is strong.

For example, a large bank might issue a 180-day CP at 15%. You invest, wait six months, and receive your capital plus interest.

Why do people choose Commercial Papers

• They offer higher returns than many other fixed-income options.

• Tenors are short, so your money isn’t tied up for too long.

• Well-established, credit-worthy companies issue them.
  
  

How to buy CPs

CPs are mostly accessed during primary issuance through:

• Banks

• Licensed brokers

• SEC-regulated investment platforms
  

There is a secondary market, but institutional investors mainly use it. Retail investors typically buy CPs only when they’re newly issued.

D. Fixed-Income Mutual Funds

Fixed-income mutual funds are one of the easiest ways to invest without having to pick individual bonds, T-bills, or commercial papers yourself. Your money is pooled with that of other investors and managed by professionals who invest in a basket of fixed-income securities.

This means you automatically get diversification, professional oversight, and a smoother experience, even if you’re just starting out.

Why do people choose Fixed-Income Mutual Funds

• They offer steady, low-risk growth.

• Your money is professionally managed by SEC-licensed experts.

• They reduce risk by spreading your money across multiple fixed-income assets.

• They’re beginner-friendly and affordable to start.
  
  

How to buy fixed-income Mutual funds

Mutual funds do not have primary or secondary markets. You simply buy units directly from the fund manager or a regulated investment platform, and redeem your money the same way. You can verify legitimate funds on the Security and Exchange Commission of Nigeria’s official list (SEC).

Important to know:

Fixed-income returns are stable, but usually smaller than what you might earn from higher-risk investments like stocks. If your goal is long-term wealth building, fixed income works best as part of a balanced portfolio, not the entire plan.

3. Real Estate

Real estate makes sense to a lot of people because it feels real. You can stand on it, lock it, fence it, or rent it out. And when you buy in the right area, the value usually goes up as development catches up.

Take a simple example. Someone who bought a plot in Ibeju Lekki back when the Lekki Free Trade Zone was still a rumour probably paid next to nothing compared to today’s prices. Same story with people who grabbed land in Mowe before the Lagos - Ibadan Expressway upgrades kicked in. These aren’t fairy tales. They’re everyday wins from people who paid attention and acted early.

Should you invest in real estate?

It depends on what you want. If you want something you can hold long-term, real estate is solid. It’s not quick money, and it’s not stress-free. You’ll deal with paperwork, verify titles, and sometimes negotiate with families or agents who all claim to “own” the same land. You also have to consider things like location, security and how close the property is to actual development, not just what marketers promise.

But if you’re patient and you buy well, real estate can be one of the most rewarding investments.

Types of Real Estate You Can Get Into

• Residential property

Think apartments in places like Lekki Phase 2, Gwarinpa, or Asokoro extension. You can rent them out to young families, students, or even do short lets if the area supports it.

• Commercial property
  Shops, office spaces, and small warehouses. A single shop in a busy area like Wuse or Yaba can bring in steady income without much hassle.

• Industrial property
  Storage units or small manufacturing spaces near hubs like Sagamu or the outskirts of Abuja, where factories are springing up. These often have long-term tenants.

• Land

Probably the most popular starting point. People buy land in growing areas like Epe or Kubwa, wait a few years, and watch the value rise as roads and estates come in.

What to keep in mind

Real estate needs patience and proper checks. It takes more money up front, and you can’t sell it as fast as stocks or other liquid investments. But if your goal is long-term growth, it’s hard to beat land or property that keeps appreciating while also generating rental income.

4. Business Investments

Business investments are more common than people think. Anytime you put money into something that helps you earn more, you’re investing. It doesn’t have to be a big company or a fancy startup. It can be as simple as upgrading your equipment, buying extra inventory before a busy season, or putting cash into a side hustle that already shows promise.

For instance, a fashion designer who invests in a better sewing machine often produces more pieces and earns higher profits. A baker who buys an oven big enough for bulk orders usually doubles output. Even content creators who upgrade their cameras and lighting see better engagement, leading to higher earnings. 

Why do people choose business investments

• They can push your income higher in a short time.

• You have more control because you’re involved in the work.

• They help you grow a skill, a career, or a business you care about.

What to keep in mind

Business investments come with risk. Your results depend on planning, pricing, demand, competition, and your own consistency. The best way to reduce risk is simple: research your market, budget wisely, track your numbers, and start with what you can manage.

How Then Can You Start Investing 

Starting your investment journey doesn’t need to be complicated. You don’t need a finance degree, huge capital, or expert connections. You just need a plan you can actually follow. Here’s a simple, beginner-friendly path to get you going.

1. Know Your Money Goals

Before you put money anywhere, decide what you want that money to do for you.

Examples of clear goals:

• Save for rent or relocation

• Build long-term wealth

• Save for a car or land

• Fund a business idea

• Create a second income stream

Your goals decide your timeline. And your timeline decides the best investment. If you have a short-term goal (under 2 years), stick to safer options like savings plans or fixed income.

If yours is a long-term goal (3 -10 years), you can explore things like stocks, mutual funds, land, or business expansion.

2. Sort Out Your Budget (Start Small If You Need To)

You don’t need millions to begin. You just need consistency. For example, you can start putting away ₦10,000 per month into a mutual fund. 

Your budget formula can be simple:

• Cover your essentials

• Save something for emergencies

• Allocate a small amount for investment

Even ₦5,000 or ₦10,000 is enough to start with regulated investment apps.

3. Understand Your Risk Level

Everyone has a different tolerance. If small losses make you panic, stay closer to safer options such as Treasury Bills, fixed-income funds, or cooperatives.

If you’re okay with market swings and want higher returns over time, stocks or index funds may fit you better. If you’re patient and prefer physical assets, land, or business expansion might suit you.

No one size fits all. Your personality matters as much as your cash.

4. Pick the Investment That Matches Your Personality

Here are beginner-friendly choices you can use:

• Mutual funds
  Easy to start. Professionals manage your money.

• Treasury Bills and FGN Savings Bonds
  Low risk. Backed by the government.

• Real estate (including land in developing areas)
  Good for long-term investors.

• Business investments
  Simple things like new equipment, extra stock, or a better tool that improves your income.

Start with one. Learn as you go. Add more later.

5. Use Trusted Platforms

Your money deserves safety. Examples of regulated platforms many Nigerians use:

• Licensed investment apps

• SEC-registered mutual fund providers

• CBN-backed banks offering Treasury Bills

• Verified cooperatives under known guilds or employer groups

Always confirm the regulations, registration requirements, and transparency before depositing anything.

6. Diversify Your Portfolio Gradually

Once you’re comfortable with your first investment, add another type. This spreads your risk and balances your returns.

Example:
You could hold a mutual fund, a small business investment, and a plot of land you’re saving for the long term. That’s how real diversification works.

Now that you know about investment and what to invest in.

What's Next

Well, we want you to remember that investing isn’t some complicated thing meant for a select few. It’s simply the next step after earning and saving. Just like Dare,  if you are at a point where you want your money to do more than sit still. You want it to grow with you. Then investing should be your next line of action

Once you understand the basics, choosing where to put your money becomes easier. Some investments help you earn steadily, others grow over time, and some require patience. Others support your business or side hustle. And your savings sit beside all of this, giving you stability so you’re never caught off guard.

You don’t need to start big. You just need to start with what you can manage, stay consistent, and adjust as life changes. Little by little, your decisions begin to add up.