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— May 04, 2024

Alternative Investments in Nigeria You Should Consider As An Investor 

Alternative investments refer to a broad category of investment opportunities that are different from typical investments like bonds, cash, and stocks. Alternative investments help investors diversify their portfolios and potentially boost investment returns because, unlike traditional asset classes, they tend to move independently, offering a hedge against market downturns and also improving your portfolio performance. […]

Alternative Investments in Nigeria You Should Consider As An Investor 

Alternative investments refer to a broad category of investment opportunities that are different from typical investments like bonds, cash, and stocks. Alternative investments help investors diversify their portfolios and potentially boost investment returns because, unlike traditional asset classes, they tend to move independently, offering a hedge against market downturns and also improving your portfolio performance. As an investor, are you considering alternative investments in Nigeria? Here’s everything you need to know before getting started.

Why Consider Alternative Investments in Nigeria?

Nigeria’s economy is one of the largest and fastest-growing in Africa. However, traditional investments like stocks and bonds involve certain limitations and processes. Alternative investments provide investors with a wider range of options to invest in the Nigerian economy.

What are the different types of alternative investments available in Nigeria?

  • Real Estate: Real estate is a popular alternative investment in Nigeria. There are a number of different ways to invest in real estate, such as by purchasing rental properties or crowdfunding real estate projects. Investing in real estate is less risky and can offer rental income and appreciation in value over time.
  • Private Equity: Private equity refers to investments in companies that are not publicly traded on a stock exchange. Private equity falls under two major categories, which are venture capital and venture buyout also known as Acquisitions. Venture capital is focused on investing in early-stage startups with high growth potential, while buyouts are more focused on more established or mature companies. Private equity can be a good way to invest in both startups and high-growth companies, but it is also a high-risk investment with a long holding period and threshold. 
  • Private Debt: Private debt refers to loans made to companies or individuals that are not originated by banks. Private debt can take various forms, including term loans, revolving credit facilities, and convertible debt. It is also a higher-risk investment but slightly less risky than equity investments due to its priority of repayment, fixed-income nature, lower volatility, and focus on capital preservation.
  • Hedge Funds: Hedge funds are investment pools that utilize a variety of strategies to generate high returns. Compared to other alternative investments, hedge funds typically offer greater liquidity which means they can easily be converted to ready cash. While certain alternative assets, like real estate and private equity, may have longer lock-up periods during which investors cannot easily access their capital, hedge funds often allow investors to access their investments periodically, although there may still be some restrictions. Investing in hedge funds comes with high risk because it involves complex strategies and may use leverage, but it can also be a good way to diversify a portfolio.
  • Commodities: Commodities are basic materials used in production, such as oil, gold, and agricultural products. Commodity prices can be volatile and influenced by factors such as supply, demand, and weather. While commodities can offer a hedge against inflation because their prices tend to rise during periods of economic uncertainty or when the value of currencies goes down, investing directly can be complex.

What should you consider before investing in alternative investments?

  • Risk: Alternative investments are generally considered to be higher risk than traditional investments. Therefore, it is important to know your risk tolerance before investing. 
  • Liquidity: Alternative investments are often less liquid than traditional investments. This means that it may be difficult to sell them quickly.
  • Investment Minimums: Some alternative investments have high investment minimums, which means that they may not be suitable for all investors.
  • Regulation: The regulation of alternative investments in Nigeria is still evolving. It is important to do your research to understand the risks involved before investing in any alternative investment.

What are the available alternative investment companies in Nigeria?

If you are looking to invest in alternative investments in Nigeria, GetEquity is your go-to alternative investment platform. 

GetEquity offers a variety of alternative investment options, depending on your risk tolerance and investment goals. With GetEquity, you can explore different investment deals ranging from commodities to real estate and even private equity provided by accredited asset managers globally allowing you to diversify your wealth. 

To learn more about GetEquity, visit www.getequity.io.

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