Things You Can Invest In: A Beginner’s Guide to Growing Your Money
If you have ever asked yourself, “What can I actually invest my money in?”, you are not alone. When people hear the word investing, they think about stocks. But stocks are only one of many options available. Depending on your goals, how long you want to invest, and how much risk you can handle, you could consider stocks, bonds, mutual funds, ETFs, real estate, government securities, or other assets.
The important thing is not simply finding something that can make money. It is finding an investment that fits your financial situation. Here are some of the most common options to know about.
1. Stocks
Stocks are probably the most well-known type of investment. When you buy shares of a company, you become a part-owner of that company. If the company performs well and its share price increases, your investment can grow. Some companies also pay dividends to shareholders.
Stocks can offer significant long-term growth, but they can also fall substantially in value. The SEC describes stocks as having greater potential returns than bonds and cash, but also greater risk and short-term volatility. (Investor)
For example, rather than putting all your money into one company, an investor might spread their stock investments across different companies and industries.
Best suited for: People looking for long-term growth who are comfortable with market fluctuations.
2. ETFs
An ETF, or exchange-traded fund, is another popular way to invest. Instead of buying individual shares of many companies yourself, you can buy shares of an ETF that holds a collection of investments. Some ETFs track broad market indexes, while others focus on particular industries, countries, or investment strategies.
One of the biggest advantages is diversification. Instead of relying on the performance of one company, you can gain exposure to many companies through a single fund. ETFs can also generally be bought and sold during market hours like stocks. (Investor)
However, not every ETF is highly diversified. A fund that focuses on one industry or a small number of investments can still carry considerable risk. (Investor)
Best suited for: Beginners and other investors who want diversified exposure without selecting lots of individual stocks themselves.
3. Mutual Funds
Mutual funds work somewhat similarly to ETFs. They pool money from many investors and use that money to purchase stocks, bonds, or other assets.
The major attraction is diversification and professional management. Instead of researching and purchasing dozens of investments individually, you can own part of a fund managed according to a particular strategy. (Investor)
There are many types of mutual funds, including stock funds, bond funds, and funds designed around specific investment goals.
Before investing, however, pay attention to fees and the fund’s investment strategy. Fees that look small can reduce your returns over time. (Investor)
Best suited for: Investors who prefer a professionally managed portfolio and want diversification.
4. Bonds
Think of a bond as lending money to an organization. Governments and companies can issue bonds to raise money. In return, investors generally receive interest according to the terms of the bond and repayment of the principal at maturity.
Bonds are generally less volatile than stocks, although that does not mean they are risk-free. Different bonds have different levels of credit, interest-rate, inflation, and other risks. (Investor)
In Nigeria, the Securities and Exchange Commission identifies fixed-income investments such as bonds as one of the investment categories available in the Nigerian capital market. (SEC Nigeria)
Best suited for: Investors looking for income and potentially lower volatility than a portfolio made entirely of stocks.
5. Government Securities
Governments also issue securities to borrow money. Depending on the country, these can include treasury bills and government bonds. They are often considered by investors who prioritize preservation of capital and predictable income, although the exact risks and returns depend on the particular security.
For Nigerian investors, government securities are one of the areas worth learning about when exploring fixed-income investments.
The key lesson is simple: lower risk does not automatically mean better returns. Cash and cash-equivalent investments tend to have lower potential returns, and inflation can reduce the purchasing power of your money over time. (Investor)
Best suited for: People with shorter-term goals or investors who want to balance higher-risk investments with more conservative assets.
6. Real Estate
Real estate is another asset people commonly consider when building wealth. You could potentially invest by purchasing property and earning rental income, or by buying property with the intention of selling it later at a higher price.
But direct real estate investing can require substantial capital and comes with costs such as maintenance, taxes, insurance, vacancies, and transaction expenses.
There is also another option: Real Estate Investment Trusts (REITs). REITs allow investors to participate in real-estate investments without necessarily purchasing and managing a property themselves. Nigeria’s SEC lists REITs among the investment opportunities available in the Nigerian capital market. (SEC Nigeria)
Best suited for: Investors interested in real estate exposure who understand the costs and risks involved.
7. Commodities and Precious Metals
Some investors also put part of their money into commodities such as gold and other precious metals.
These assets can behave differently from stocks and bonds, which is one reason some investors consider them when diversifying a portfolio.
However, commodities can experience significant price movements and do not necessarily produce regular income like some bonds or dividend-paying investments.
Best suited for: Investors who understand commodity markets and want to diversify beyond traditional financial assets.
8. Investing in Yourself
There is one investment people sometimes overlook: your own skills. A course, professional certification, business skill, technical skill, or education can potentially increase your future earning power.
Unlike a stock, you cannot watch its price move on a chart. But learning a valuable skill can potentially help you earn more money for years.
For someone starting with very little money, investing in skills may be one of the most practical places to begin.
So, What Should You Invest In? There is no single investment that is right for everyone. Your choice should depend on three major questions:
1. What is your goal?
Are you investing for retirement? A house? Your children’s education? A business? Or simply long-term wealth? Your goal determines how much time you have and how much risk may be appropriate.
2. How long can you leave the money invested?
Someone investing for 20 years may be able to tolerate market fluctuations that would be unacceptable for someone who needs the money next year.
The SEC recommends considering both your time horizon and risk tolerance when deciding how to allocate your investments. (Investor)
3. Can you diversify?
One of the most important principles of investing is diversification — spreading your money across different investments rather than relying on one.
If you put all your money into one company and that company performs badly, your entire investment can suffer. Holding a broader mix of assets can reduce the impact of any single investment performing poorly, although diversification cannot eliminate investment losses. (Investor)
A Simple Example
Imagine someone has ₦500,000 available for long-term investing. Instead of automatically putting the entire amount into one stock because they heard it could “double,” they could first consider their goals and risk tolerance.
They might decide to build a diversified portfolio using a combination of investments such as equities, funds, and fixed-income assets.
The exact percentages would depend on their individual circumstances. There is no universal formula that says everyone should invest the same way.
The principle is more important than the specific numbers; Understand what you are buying. Know the risks. Diversify where appropriate. Think long term.
Don’t Invest Because Someone Promised You Easy Money
One of the biggest mistakes new investors make is chasing investments simply because someone promises extraordinary returns.
Every investment carries some form of risk. The SEC specifically recommends understanding an investment’s risks, fees, liquidity, and potential for fraud before putting your money into it. (Investor)
If someone tells you that an investment is guaranteed, risk-free, or will make you rich quickly, take a step back and investigate.
For Nigerian investors, it is also worth checking whether the investment professional or capital-market operator is properly registered. Nigeria’s SEC provides investor information and a list of registered capital-market operators. (SEC Nigeria)
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