Inflation is every investor’s quiet enemy.
It eats away at the value of your savings and reduces what your money can buy over time.
In Nigeria today, inflation has eased to around 20.12%, down from the 34.8% peak in December 2024.
While that’s a relief, it’s still high enough to erode your wealth if your investments don’t keep pace.
That means one thing: any investment returning less than 20% per year gives you a negative real return. You might feel richer, but your money is losing value.
To stay ahead, investors must aim for returns that beat inflation while keeping risk in check. The key is not chasing the highest returns but building a balanced portfolio.
Earning a nominal 15% of your money may sound good, but if inflation is 20%, your real return is –5%.
Beating inflation means looking for investments that can deliver a return above 20%, with an acceptable level of risk.
In Nigeria’s current market, this is not easy, especially when many fixed-income instruments still offer yields below inflation.
For instance, the latest Nigerian Treasury Bills (NTBs) auctions closed with stop rates around 15–16%, while the October 2025 FGN Savings Bonds offer 14.062% (2-year) and 15.062% (3-year) returns.
These are safe and tax-free, but their real yields are still negative when compared to inflation.
So, while they remain good for capital preservation and predictable income, they can’t single-handedly protect your wealth from inflation’s bite.
That means investing in these risk-free assets alone cannot help you beat inflation. You’ll need to look at other asset classes that can generate higher returns. Stocks and alternative assets easily fill in that gap.
Investing to beat inflation can be exciting, but risks are everywhere. Here’s what to watch:
Knowing these risks helps you grow wealth safely while still aiming to beat inflation.
Not all investments are created equally. Some give returns below inflation, while others can outpace it—but higher returns often come with higher risk.
Not all investments are created equally. Some give returns below inflation, while others can outpace it—but higher returns often come with higher risk.
That’s why smart asset allocation is key to building a portfolio that grows your wealth safely.
Allocate about 40% of your portfolio to equities to drive the portfolio return.
With a target return of 55% and a risk factor of 0.85, the expected risk-adjusted return is around 32%, contributing about 19% to the overall portfolio’s target return.
This asset class won’t make you rich overnight, but it provides predictable income and keeps your money safe.
Allocate 20% of your portfolio to these instruments. With expected returns of 15% and a risk factor of 1 (zero risk), they contribute roughly 3% to your overall target return.
These investments are backed by the Federal Government, making them low risk, helping your portfolio stay balanced and protected against inflation.
Commercial papers are short-term corporate debt instruments that companies use to fund operations. They offer higher returns than government bonds, but with slightly more risk.
Allocating about 20% of your portfolio to commercial papers can help stabilize returns. Since the interest income is paid upfront, you can reinvest it to potentially boost your overall portfolio return
Given an expected return of 22% and a risk factor of 0.9 (to account for market fluctuations), the risk-adjusted return comes to roughly 19.80%, contributing about 3.96% to your overall portfolio return.
Alternative assets like gold, commodities REITs, and other non-traditional investments provide a hedge against inflation and currency swings. They can offer strong returns when traditional markets fluctuate.
Allocating about 20% of your portfolio to alternatives can diversify risk and boost overall returns.
Given an expected return of 50% and a risk factor of 0.9 (to account for price volatility), the risk-adjusted return comes to roughly 45%, contributing about 9% to your overall portfolio return.
These assets complement equities and fixed-income instruments, helping your portfolio stay resilient while chasing inflation-beating returns.
Not every stock or alternative asset will help you beat inflation. Being selective is key.
For this asset class, picking the right stock is key. While some have outperformed inflation, others have not.
This shows that opportunities exist, but investors must be intentional in picking stocks:
The key takeaway: focus on fundamentally strong, inflation-beating stocks rather than chasing hype.
Alternative assets here include gold, currencies, crypto, exchange-traded funds, derivatives, and real estate through REITs.
By carefully selecting equities and alternatives, you maximize your chances of hitting your target portfolio return.