Nigerian Women and the Fixed-Income Market

Thursday, January 20, 2022 / 10:04 AM / Ayomide Oguntoye for WebTV / Header Image Credit: WebTV

In a recent interview with Adaeze Nwachukwu, an Economist and Research Analyst at Proshare who covers the Fixed Income Market, she explained what goes on in the market and how women can leverage it for investments.

While describing fixed income, she mentioned that investing in the market is an upgrade from savings as it allows for wealth preservation and returns on investment with a level of low risk involved.

In simple terms, she defined fixed income investment as investment security that pays investors fixed interest or dividend payments until its maturity date. At maturity, investors receive the principal amount they had invested.

For instance, a company might issue a 5% bond with a N1,000 that matures in five years. The investor buys the bond for N1,000 receives a semi-annual (every six months) payment of N50 per unit of N1000 bond value. At the end of five years, the investor gets back their initial capital plus the last year's coupon payment of N50. Over the five years, the company pays a coupon ( or what amounts to an interest payment) ten times for a five-year bill.

Speaking on the types of investments, the research analyst mentioned that government and corporate bonds are the most common types of fixed income products as these same set of people are the issuers. She added that fixed-income securities provide predictable incomes, unlike the market for company shares that do not pay regular and predictable cash flows to investors or variable income securities.

Nwachukwu advised that instead of having a savings account that might lose value to inflation, it is profitable to invest such savings in the fixed-income market. It also serves as a good portfolio diversifier for any investor.

The analyst said that for every kind of investment, an investor should have a clear understanding of the type of investment, most importantly, have a level of financial education. She advised potential investors, especially women,  to carry out due diligence on any company or asset they intend to invest in. 

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