When it comes to investing and building a lasting wealth, professional investors advise that you spread your money around different assets classes – that is, “diversify” your investment. Why? because it’s often believed that diversification protects you from losing all your money during market swings.
Besides, the pending devaluation of our local currency against major foreign currencies means that your investment in Naira denominated assets alone – stock, properties, or bond – may expose you to the high risk of putting your eggs in one basket. Just recently, it was all over the major newspaper headlines that the CBN might float the Naira; what this means is that the exchange of USD to Naira will be determined by market forces with economic analysts predicting a potential double-digit growth in the price of essential commodities, this was eventually tamed by the regulatory body.
My question is, what if it was true? whether you own stocks, treasury bill, bond, or real estate, as long as your assets are in Naira, your portfolio would have lost value relative to the USD.
Having a lot of investments doesn’t mean diversifications, you need to understand the least talked about categories of diversifications beyond equities, real estate, and fixed income securities. This is diversifications away from local currency assets to the US dollar-denominated assets.
As Nigeria economic risk worsens, it makes more sense to suggest foreign assets diversifications; where one diversifies and build short or long term foreign currency portfolio.
4 reasons I diversified into US dollar portfolio:
If you want to know why putting your money into foreign currency assets matters, there are interesting reasons:
- We are oil dependent and are largely exposed to sudden shock that follows lower prices. Based on historical antecedents, lower oil prices don’t favour the economy; equities, real estate, even the bank’s fixed deposit. Although you get a higher yield on treasury bill and bond the risk of default according to credit rating agencies is high.
- Different types of investments are affected differently by world events and changes in economic factors such as interest rates, exchange rates and inflation rates, so it makes sense to diversify into assets to take advantage of the longterm USD/NGN exchange rate appreciations; we call this hedging.
- Foreign diversification enables you to build a portfolio with generally less risk than the combined risks of one-currency assets.
- If your portfolio is not diversified, it may carry the unnecessary risk of being affected by inflation.
The type of assets I have diversified into:
Currently, I am diversified into Crypto assets and US stocks
The cryptocurrency market wasn’t considered a mainstream asset until recently.
Facebook had just announced her decision to venture into the crypto-space by launching “Libra”, a coin backed by top global powerhouses like Visa, MasterCard, Paypal, etc. The coin, according to the company, will serve as a digital currency for seamless cross-border transactions among its 2b users worldwide. This news coupled with the likes of Microsoft adoption of Etherum blockchain, Fidelity’s inclusion of cryptocurrencies in its trading terminal, and other growing institutional interest in blockchain technology is enough proof that opportunities abound in that space.
My crypto-portfolio comprises Bitcoin, Etherum and Ripple. I choose these three because they were created to address specific problems.
- Bitcoin a digital payment currency that utilizes cryptocurrency (a digital medium of exchange) and peer-to-peer (P2P) technology to create and manage monetary transactions as opposed to a central authority. Many view this crypto as a digital gold one can explore to hedge against global uncertainties.
- Etherum is a global, open-source platform for decentralized applications; most top IT firms use this crypto to build facilities transactions between parties.
- Ripple is a real-time gross settlement system, currency exchange and remittance network created by Ripple Labs Inc. Just recently, Ripple announced its partnership with Moneygram and European Union, a deal that will enhance cross border remittance among 100 million + users globally.
It is the individual and unique nature of these cryptocurrencies that makes me choose them, besides they make up 80% of the aggregate crypto market value which means they are more traded on a daily basis compared to other alternative coins.
I started buying and building a cryptocurrency portfolio when Bitcoin, Etherum and Ripple traded for $6,300, $153 and $0.35. As of today, Bitcoin sells for $11,400, Etherum sells for $311 while Ripple is $0.46. The Nigeria stock market, in the same period, had lost up to 10% of its value as foreign investors sell their core holdings on economic uncertainties.
Well, this doesn’t mean that if you buy either of these cryptocurrencies, you will earn the same return, not so fast! you need a coach that will show you how to buy at the right time.
If you read – My favourite indicators for spotting buy or sell opportunities in Crypto market, you will learn the 3 tools I use to make passive income from the volatile market.
Not everyone knows that Nigerian investors can actually trade international stocks (American stock exchanges, NASDAQ and NYSE) the same way you trade local stocks; buy in units, keep and sell anytime you want.
A good mix of foreign and local stocks is highly recommended to protect your portfolio against economic “shocks” that effects the Naira assets. It has been proven over time that stocks issued by US companies outperform our local-listed stocks since they have exposure to different opportunities in other parts of the world.
To get started in this highly-sort after stock market, you need to register with a regulated online stock broker that accepts non-US residents or foreigners. Even if you find one, there is none that accepts Nigeria investors for regulatory reasons.
How do you trade US-listed stocks, you may ask? I appealed to a stockbroker for 5-months and shared genuine reasons Nigerians should be accepted via a different US-based clearinghouse that is allowed to facilitates fund flow to/from Nigeria and this worked for me. Although I was assigned a unique registration link so that Nigeria investors who go through the link will be properly tracked, recorded and routed through the clearing for hitch-free registration.
Once your account is verified and approved for trading, you need to fund with at least $100 before you trade international stocks.
The door is now open to interested investors who would like to join my Whatsapp group – Foreign Asset Investors – for US stocks and crypto-assets.
This is a paid private Whatsapp group for serious investors interested in diversifying into foreign currency assets and additional benefits like:
- how to open a legitimate online stock brokerage account in the US.
- how to open a crypto portfolio investing account and fund with Naira.
- how to trade and accurately analyse the US stocks, Bitcoin and Etherum market (video package will be sent to your email)
- exclusive bonus: the best-fixed deposit opportunities that generate 20-25% return per annum.
The information I will share in this group is worth more than N50,000 but as my subscriber, you can gain direct access at a massively discounted fee of N8,500.
You will be redirected and automatically added to my private Whatsapp group after successful payment. Your return on investment in this exclusive Whatsapp training is more than 1000% and if you aren’t satisfied with the information shared, feel free to chat me privately on +2348084219399 for a refund.