Different Ways You Can Invest In Banks

Just as many opportunities in Nigeria are largely untapped, the Nigerian Banking sector is teeming with opportunities that many people have failed to leverage.

The banking sector serves as one of the strongest pillars of any nation’s economy. The strength of the banks in a nation can give you an idea of the overall strength of the economy and the same is true for Nigerian banks.

Just as many opportunities in Nigeria are largely untapped, the Nigerian Banking sector is teeming with opportunities that many people have failed to leverage. What is most amazing is that in the Banking sector, there’s a wide range of ways you can invest.

They are so diverse that you can build a relatively balanced portfolio by just visiting a bank to invest. Here are some of the different ways you can.

Savings Account

Many people, especially around here, believe that savings accounts are simply regular accounts you put your money in and spend from. Ideally, recurrent spending should be made from current accounts while savings accounts should be for you to save your money in.

Where you leave your funds in your savings account untouched, you not only get to set aside money, you also earn interests that could be up to 4% depending on the bank. While 4% is below the inflation rate and will ultimately have you losing value over the long term, a savings account is a great way to build your savings for advanced forms of investment.

Fixed Deposits

Another great way to save money and also to invest your funds is to opt for Fixed Deposits. A fixed deposit is a financial instrument provided by banks that offer a higher rate of interest than savings accounts.

You are required to make deposits and leave them to mature. To do this, you can just send a letter to your bank and ask them to move a certain sum of money for a certain period.

Mutual Funds

Banks also have mutual funds that you can invest in. The funds can be targeted to various investment objectives, but the underlying process is to create a pool of investments from interested parties and put all that money into investments that will yield returns for the investors.

Having a pool of fund opens up advantages like economies of scale and the ability to invest in much bigger securities. An example is how a bank could have a Real Estate Investment Fund.

Treasury Bills

While treasury bills are provided by the government of a nation and not the banks, banks serve as an intermediary. Treasury bills are also short term investments. They are however investments in the money market and are very safe.

Their interest rates move with the forces of demand and supply but they are higher than whatever a bank itself will offer you.

Commercial Papers

Banks that are relatively stable also provide you with the option of investing in commercial papers. Commercial papers unsecured, short-term debt instruments issued by stable companies and they are used by the organizations to meet short term financial obligations.

They are not safe like Treasury Bills, but they can also be great for earning good rates of return.

Stocks

One of the best ways to invest in any bank is to invest in the bank itself. That is, own a stake of the entire value of the bank. This is what stock investments do for you. The stock market makes you a shareholder and gives you the possibility of unlimited gains in the market.

You can either opt for a bank that gives you recurring dividends or choose the one that will grow in value (or both). The risks are higher than any on this list, but as expected, the possible rewards are not comparable to any on this list as well.

There are also so many other investment opportunities for different kinds of people offered by banks. For something more tailored to your investment needs, you can also walk into any bank and ask for the different saving/investment packages you can be a part of. Written by

Lawretta Egba.