“How to find Dollar investments for Nigerians” or “How to save in dollars on Cowrywise” is probably something you have searched for, or something similar. No, we do not have your search queries under watch but we are Nigerians as well. We get that you want investment options that help you expand your portfolio while giving you a chance to beat the recent inflation rate in Nigeria. Well, you’re in the right place. 😉
Dollar Investments for Nigerians
With Cowrywise, you can now access Dollar mutual funds: the United Capital Nigerian Eurobond Fund and the ARM Eurobond Fund.
Eurobond? What’s that? Isn’t it supposed to be a Dollar-based investment, how did Euro (£) enter?
Well, Eurobonds are still Dollar investments. I’ll explain how shortly, but first what are bonds?
What is a bond?
A bond is an agreement between two parties – like those old Nollywood movies where they make blood oaths to love themselves forever. 😫 Ok, ok. I’m kidding, a bond in investment isn’t a blood covenant but you get my point.
Party A borrows from Party B and agrees to pay back with a set interest rate. It is a loan that an investor lends to (typically) a corporate or governmental body. So, a government bond is simply the government borrowing money from the public with the agreement (i.e. bond) to pay back with a certain interest rate.
So, what are Eurobonds?
Eurobonds are bonds that are issued in international currencies – currencies different from the host country’s currency (in our case, currencies that are not Naira).
For example, the Nigerian government can issue a bond to foreign investors that allows them to lend the Nigerian government money in dollars, not Naira (since they don’t spend Naira in their country). 🌚
Eurobonds – How to save in dollars on Cowrywise the better way! 🤩
Eurobonds is like saving your money in dollars “in the hand” of companies or the government. They invest it and pay you your return in dollars.
What are Eurobond Funds? 💸
This is a type of mutual fund that invests in Dollar-denominated bonds. With this, you can lend the Nigerian government and companies dollars and get back your returns/interests in dollars.
How to save in dollars on Cowrywise – How can you access the funds?
- You need to have the updated version of the Cowrywise app. If you are not a user, download the app here
- Click on the “Invest” tab, Click “Create a new investment”
- Take the risk assessment (optional). This is a short assessment that lets you know what type of investor you are – a low, medium or high-risk investor
- Tap “Dollar Mutual Funds” and invest in your preferred option
How to withdraw from the fund
- To withdraw from the fund anytime, tap “Invest”
- Select “USD Mutual Funds”
- Select the dollar investment plan you want to sell
- Tap the three dots at the top right corner
- Tap “Sell Units”
Bear this in mind, if you sell your units before the returns payout date, you’ll only gain if the price per unit has increased. This means that if you bought a unit at $10 and sell at $11, you’ve gained $1 per unit.
More important details
The Eurobond Fund is meant for long-term investments to grow and preserve the value of your investments. It is not fit for short-term investments that are below a year.
Also, there are two sources of returns when you invest in dollar assets like Eurobond with Naira:
- Returns/Interests. This is the return you get on your Eurobond investment. On Cowrywise, we show you the Year to Date (YTD) performance of the funds. This is the amount of profit/returns the investment has earned from Jan 1 of the current year till the current date. It is not a guarantee of what the eventual returns might be.
- Return from changes in the value of the Naira against the USD. This means that you gain additional returns as a Nigerian who has invested in Eurobonds if Naira loses value against the USD.
Here is a simple example to drive this point home:
It was 2019
You invested NGN360,000 with a return of 8% per annum. This is converted to USD1,000 at an exchange rate of 360 Naira per 1 USD.
It is 2022
If Naira loses its value against the USD, the exchange rate becomes NGN600 per USD. The USD1,000 you invested would have earned 8% over the first year: 8% x USD1,000 = USD80. This implies you had USD1,080 as the total value of your investment by 2020. The USD1,080 would also have earned 8% over the second year: 8% x USD1,080 = USD86.4. This implies you had USD1,166.4 as the total value of your investment by 2021. When you convert this value to Naira at the exchange rate of NGN600 per USD, this gives USD1,166.4 x 600 = NGN699,840.
Your total return in Naira = N339,840 or 94.4% of NGN360,000. 🤯
In simple terms, you have earned returns from two sources: the fixed return/interest on the Eurobond and the change in the value of the Naira to USD.
When investing, it is important to study previous trends as it can help you make better decisions to diversify your assets. With as low as $10 (the naira equivalent), you can start investing in the Eurobonds available for you on Cowrywise right now. The exchange rate is determined by the current market performance and Cowrywise almost always has better exchange rates for you. (Don’t tell anyone I told you that. 😉)
Get started with dollar investments today by downloading the Cowrywise app.
Already have the app? Log in and begin investing in dollar mutual funds now.