Nigeria’s double-digit inflation rate is something you need to take seriously because it is affecting your long term financial goals one way or another. Consider the following 5 ways to hedge against inflation.

Invest in Stock: 

In many cases, companies are able to pass the rising costs to consumers. So prioritize companies that are able to increase the prices of their goods and services without losing demand. Also, look at high margin service focused technology companies that have largely minimal production inputs. But instead of throwing your money into one sector, have a diversified portfolio including commodities and healthcare products. Ideally, something like an S & P 500 Fund. While inflation is bad for stock trading short term, in the long term, good stocks are able to outperform inflation.

Limit Your Wants: 

The harsh reality of inflation is that you have to limit non-essential spending. It could be as little as making a choice not to buy a new piece of clothing every month or reducing entertainment subscriptions.  There is always something you can do without.

Seek Dollar Denominated Investments: 

Store some of your funds in hard currency; preferably in an actual account abroad. I think that the current regulatory environment in Nigeria is very unpredictable and you don’t want to be caught up in any policy change that will affect access to your funds.  If you don’t have access to a foreign account, use fintech companies like Risevest that engage in Dollar-denominated investments.

Sometimes people say that this strategy is risky because the Dollar could fall against the Naira. However, In deciding whether a currency is going to improve, you have to look at factors such as:

  1. Government revenue diversity.
  2. political stability
  3. Amount of foreign investment
  4. Technological innovation.
  5. Human capital development.

So, leaving historical performance off the table, when you evaluate Nigeria and the US against these aforementioned factors. You have an idea which currency is going to be stronger in the next 3 years.

Improve your Ability to Earn More Money: 

Improve your body of knowledge by reading a lot and taking short courses that are relevant to your industry. Research best practices in your field and work towards closing the skill gaps. Furthermore,  be visible. Attend conferences and network with peers.  Long and short of it, aim to work at a better company with greater pay.

Consider Leaving the Country:

Have a global mindset. Leave Nigeria if you can. You can always come back. Be dedicated to the process of moving out of Nigeria. Don’t worry, the country would always be here (smiles, hopefully).  But it’s not unpatriotic to move to another country.