Deciding where to invest N1 million in Q4 2025 requires a strategic and informed approach.
With inflation easing to 20.12% as of August 2025, the goal for every investor is not just earning returns but achieving real returns that outpace inflation.
The fundamental investment principles remain clear:
Therefore, a viable investment must generate returns that reward you for time, compensate for risk, and surpass inflation.
However, asset selection also depends on your age, investment goals, and risk tolerance.
Equally important are macroeconomic and microeconomic factors shaping the market outlook.
At present, Nigeria is in a disinflationary phase, with a relatively stable foreign exchange market and external economies beginning to cut interest rates.
These dynamics, coupled with ongoing banking and insurance recapitalization exercises, as well as the CBN’s plan to take over the fixed income settlement platform from FMDQ, will all influence asset performance in the final quarter of 2025.
With the CBN cutting the Monetary Policy Rate (MPR) from 27.5% to 27% last month, equities stand to benefit first.
Lower policy rates typically reduce yields on fixed income securities, prompting investors to seek higher returns in the stock market.
Recent Nigerian Treasury Bills stop rates ranged between 15% (91-day tenor), 15.30% (182-day tenor), and 16.78% (364-day tenor) all below inflation, confirming that real returns remain negative in this segment.
Conversely, the Nigerian stock market continues to show resilience, with over 99 stocks delivering year-to-date (YtD) gains above inflation.
Moreover, the rate cut is likely to reduce borrowing costs, leading to lower interest expenses for companies particularly in the consumer goods, industrial, ICT, and conglomerate sectors.
As a result, stocks within these sectors may attract renewed investor interest as market sentiment and confidence improve.
This makes equities a strong consideration for investors targeting inflation-beating performance.
A substantial part of the N1 million investment can be strategically diversified across key growth sectors:
A substantial part of the N1 million investment can be strategically diversified across key growth sectors:
Consumer Goods Sector: Last year, the sector underperformed due to macroeconomic challenges such as high interest rates, inflation, and exchange rate volatility.
However, 2025 has been a turnaround year and the sector has shown impressive resilience, with only one laggard out of its 20 component stocks.
Investors who already hold positions should consider maintaining them, while those yet to invest may look to take positions in stocks still trading below their 52-week highs.
For instance, Honeywell Flour, despite posting an impressive year-to-date gain of 258%, is still trading at about 60% of its 52-week high, while Northern Nigeria Flour Mills remains over 30% below its 52-week peak.
Balance your selection with dividend-paying stocks, particularly companies known for paying high dividends in absolute figures.
These stocks not only provide steady income but also help cushion your portfolio against market volatility.
In this context, stocks to consider include Seplat, Okomu Oil, Presco, Skye Shelter Fund, Dangote Cement, and Airtel Africa; all of which have maintained consistent dividend histories with high dividend payouts in absolute terms.
For example, Okomu Oil recently declared an interim dividend of N30 per share, meaning that holding 10,000 units of the stock would fetch a total interim dividend of N300,000.
Trading liquidity
It’s also important to consider trading liquidity when picking stocks. Liquidity ensures you can easily enter or exit positions without significantly affecting prices.
Banking stocks stand out in this regard; the sector commands the highest average trading volumes and enjoys a relatively large free float, making transactions smoother.
Beyond liquidity, many banking stocks also appeal to income-focused investors, given their consistent dividend payouts and strong earnings base.
Fixed Income: Safety with predictability
For risk-averse investors, Treasury Bills, Federal Government Bonds, and Savings Bonds offer a safe and predictable way to earn income.
While their yields may not completely beat inflation, they remain vital for preserving capital and reducing overall portfolio risk.
However, note that the minimum investible amount for primary issues may be above this range, meaning small investors might need to access these instruments through the secondary market or fixed-income mutual funds.
Corporate commercial papers (CPs) currently offer returns of around 22%, paid upfront — creating room for reinvestment and compounding potential.
However, just like government bonds and Treasury Bills, the minimum investible amount often limits access to retail investors, except through the secondary market or through money market mutual funds.
Still, these instruments combine liquidity with relatively moderate risk, making them suitable for investors seeking short-term, inflation-beating yields.
Since access to primary issues of Treasury Bills, bonds, and commercial papers is often restricted by high minimum investment thresholds, alternative assets have become increasingly relevant.
These assets not only provide diversification but can also serve as effective hedges against inflation — though their returns tend to be more volatile.
Investible options include commodities (like gold), currencies, cryptocurrencies, exchange-traded funds (ETFs), derivatives, and real estate through REITs.
Gold, for example, has surged by over 50% year-to-date in 2025, reinforcing its inflation-hedge appeal. Ultimately, the key is to select assets offering the best risk-adjusted returns rather than simply chasing the highest nominal yields.
In Q4 2025, investors with N1 million should focus on a mix that balances growth, income, and inflation protection.