“How to find Dollar investments for Nigerians” is probably something you have searched for, or something similar. No, we do not have your search queries under watch. We are Nigerians also. So, we get it; you want stable investment options that give you a chance against the devaluation of Naira. Well, your search can stop now.
Dollar Investments for Nigerians
With Cowrywise, you can now access the first of our Dollar mutual funds: the United Capital Nigerian Eurobond Fund. Eurobond? Isn’t it supposed to be a Dollar-based investment option? It still is. Let’s explain.
What are Eurobond Funds?
Eurobonds refer to a bond type that is issued in international currencies. That is, currencies different from the host country’s currency. For example, the Nigerian government can issue a bond that is denominated in dollars to allow foreign investors to access them also. Read more on African Eurobonds here.
What is a bond?
A bond is an agreement between two parties. One party borrows from the other and agrees to pay back with a set interest rate. So, a government bond is simply the government borrowing money from the public with the agreement to pay back with a certain interest rate.
What is the Nigerian Eurobond Fund?
It is a type of mutual fund that invests in Dollar-denominated Eurobonds, floated by the Federal Government of Nigeria, as well as domestic top-performing companies like SEPLAT, Ecobank and Firstbank.
Read more about mutual funds here
How can you access the fund?
- You need to have the updated version of the Cowrywise app. If you are not a user, download the app here.
- Scroll down to “Invest in Mutual Funds”.
- Take the risk assessment, if you have not.
- Tap “All Funds”.
- Tap United Capital Eurobond Fund to get started.
How to withdraw from the fund
- To withdraw from the fund anytime, tap “Plans”
- Select “Investments”
- Select your dollar investment plan
- Tap “Sell Units”
Bear this in mind, if you sell your units before the returns payout date you’ll only gain from price changes. That is if you bought a unit at $10 and sell at $11, you’ve gained $1 per unit. We’ll explain more about returns after the video.
More important details
The Eurobond Fund is meant for long-term investments. It is not fit for short-term investments that are below a year. This is to help grow and preserve the value of your investments. There are two sources of returns when you invest in dollar-asset like Eurobond with Naira:
- The coupon payment or yield. This is the promised return on the Eurobond. Its return currently sits around 8% per annum.
- Return from changes in the value of the Naira against the USD. This simply means if Naira loses value against USD, as a Nigerian who has invested in this Eurobond, you have gained additional return.
Here is a simple example to drive this point home
It is 2019
You invest 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 2020
If the Naira loses 10% of its value against USD, the exchange rate becomes NGN400 per USD. Well, we are not making any forecast. This is just an example 😊. The USD1,000 you invested would have earned 8% over the year: 8% x USD1,000 = USD80. This implies you now have USD1,080 as the total value of your investment. When you convert this value to Naira at the exchange rate of NGN400 per USD, this gives USD1,080 x 400 = NGN432,000.
Your total return in Naira = N72,000 or 20% of NGN360,000.
In simple terms, you have earned returns from two sources: the fixed return on the Eurobond and the change in the value of the Naira per USD.
Finally, it is key to note that you can start with as low as $10 (the naira equivalent). The exchange rate will be determined at the point of investing. Get started with dollar investments today by updating/downloading your Cowrywise app.
What if naira gain some percentage, will it affect the money invested?
If you convert the investment back to naira, at that point, yes. However, it works the other way round too. Finally, this doesn’t affect your returns.
The interest is gotten per month or how many months do i have to leave the money that has been invested
Please if I don’t have up 100USD, does it mean I can’t invest.
Not anymore. You can now invest with as low as $10
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i do concur on some issues however, but not all.
I love this!!! I am definitely brilliant opportunity for retail investment. What is your take on Creating a Real estate funds ( focused on commercial and residential property development in Nigerian major cities)?
Trust me, Nigerians, home and abroad, are waiting to join on such opportunity to invest in a well-structured security that addresses not just documentation/regulatory issues, but also handled by real professionals.
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on some issues while, but not all.
Is it possible to invest to add to your investment on dollar mutual fund?
Yes, please.
How many is the minimum units I can withdraw?
0.5 Units
Can l continue to add to my investment monthly?
What is the naira equivalent of 0.5 units
Hello Ope…my question on the Eurobond. As @ today 20th November entry exchange rate 460 (buy rate) and exit/sell rate is 450..if at some point in a one year tenor…the rate increases..will the exit/sale rate also increase. I have a plan on cowrie already and want some capital preservation. Though i have noted from your platform that there is quite a significant rate difference between the sell/buy rate in addition to a processing fee that runs somewhat high
In what currency is the return paid?