In Nigeria, one of the most important things many Nigerians fail to understand about investing is that their strategy should not remain the same throughout their lives. What works for you at 30 should not be the same thing you are doing at 60.
Your age, responsibilities, and how much time you have before you need your money should all shape your investment strategy. This is often called the life cycle approach to investing.
When you are younger, you have time on your side, so you can afford to take more risks, because even if things go wrong, you still have many years to recover, as your investments have more compounding periods. This is the ‘Accumulation stage’, which many people in their 20s and 30s are in. At this point, the focus should be on aggressively building wealth.
For example, a 30-year-old banker in Abuja earning around ₦350,000 per month can afford to allocate a large portion of his savings to the stock market or real estate. With inflation currently hovering around 15.8 percent, keeping too much money in savings accounts or low-yielding fixed deposits will only make him lose purchasing power over time. The accumulation stage is the time to focus on growth and reap the benefits of compounding.
However, as you move into your late 40s and 50s, the game begins to change. At this stage called the ‘Consolidation State’, you are closer to retirement, and the money you have worked hard to accumulate now needs protection. This is where many Nigerians make mistakes. Some people continue taking high risks with their money even when they no longer have the luxury of time. A 55-year-old civil servant who plans to retire in the next five years should not have 80 percent of his portfolio in volatile stocks. Instead, it makes more sense to shift towards more stable investments gradually. Fixed Deposits, which are currently offering true yields of 18 to 22 percent, and good Money Market Funds yielding 17 to 20 percent, become more in line with the goal of consolidation. The goal is no longer to chase the highest possible returns but to protect what you already have while still trying to beat inflation.
“As you get deeper into your 60s and 70s, your focus naturally moves from taking care of yourself to thinking about what you will leave behind.”
When retirement finally comes, usually around age 60 or 65 for most Nigerians, your investment focus must shift again. At this stage, called the ‘Distribution phase’, you are no longer working, so your investments need to start working for you. The money you have saved over the years should now be structured to generate regular income. A retiree with ₦50 million in savings, for instance, needs to carefully consider how to generate monthly or quarterly income without depleting the capital too quickly. Relying only on high-risk investments at this stage can be dangerous because a major market crash can wipe out a significant portion of your savings when you no longer have the earning power to recover. This is why many retirees in Nigeria should combine fixed-income instruments with carefully selected dividend-paying stocks and real estate to create a steady passive income stream.
There is also a final stage that many people do not think about until it is almost too late. This is the gifting or legacy phase. As you get deeper into your 60s and 70s, your focus naturally moves from taking care of yourself to thinking about what you will leave behind. At this point, proper estate planning becomes very important. Many wealthy Nigerians have lost large portions of their wealth after death simply because they did not put proper structures in place. Whether it is writing a will, setting up a trust, or gradually transferring assets to your children while you are still alive, this stage requires a different kind of thinking. The goal here is no longer about making the highest returns but about ensuring that your wealth serves your family and the causes you care about after you are gone. The truth is that life does not wait for us to figure things out.
Many Nigerians in their 40s and 50s are still investing as if they were in their 30s, while some young people are being overly cautious with their money. Both approaches can be costly in the long run. The current environment, with high inflation and a volatile naira, makes it even more important to adjust your strategy as you age.
What worked five or ten years ago may no longer suit where you are today. The key is to be honest with yourself about which stage of life you are in and adjust accordingly. Your investment portfolio should reflect your current reality, not where you wish you were. As you grow older, your investment strategy must also grow with you. The earlier you start making these adjustments, the smoother your financial journey will be. In the end, the best investment strategy is the one that aligns with your life stage and adapts as your needs change.
Kalu A. Aja is a Certified Financial Education Instructor and an astute professional with over 27 years of experience spanning capital market operations, treasury, investment, asset management, and occupational pension services. Do follow on X @finplankaluaja1.
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