In Nigeria, two of the most popular forms of investment are real estate (landed property) and the capital market.
While land banking and property ownership have long been seen as symbols of wealth, the dynamics of modern finance and wealth creation reveal that investment in the capital market offers far greater advantages.
First, liquidity is a major factor. Real estate is not easily convertible to cash, and selling a landed property may take months or even years. On the other hand, stocks, bonds, and mutual funds in the capital market can be sold almost instantly, allowing investors to access cash quickly when needed.
Second, the capital market offers diversification. With real estate, an investor may put all their savings into a single piece of land. This is risky because the land may be subject to litigation, government acquisition, or low demand. However, the capital market provides the opportunity to spread investments across different sectors – banking, telecommunications, manufacturing, agriculture, and more – reducing overall risk.
Third, returns on capital market investments often outperform real estate in the long run. Dividends, capital gains, and bond yields provide both regular income and long-term growth. Land, while appreciating, is often passive and requires additional expenses like fencing, taxes, or legal fees before becoming profitable.
Additionally, the capital market is regulated by the Securities and Exchange Commission (SEC) and Nigerian Exchange Group (NGX), ensuring transparency and protection for investors. Real estate transactions, by contrast, are often plagued by fraud, multiple sales of the same land, and lack of proper documentation.
Finally, technology has made investing in the capital market more accessible than ever. With just a smartphone, one can open a brokerage account, buy shares, monitor performance, and sell when necessary. Land investment, in contrast, still involves tedious physical inspections, surveys, and paperwork.
In conclusion, while landed property has cultural and sentimental value, the capital market provides superior advantages in terms of liquidity, diversification, higher returns, transparency, and accessibility. For Nigerians seeking sustainable wealth creation, the capital market remains the smarter choice.
