Last Updated on August 3, 2021 by Opeyemi Quadri
The foreign exchange market or forex has several definitions for hundreds of people around the world, the most important thing is that FX is a market where currencies across the world are traded 24/7. When you buy Euro with Naira or USD with Pounds, that’s forex.
To a Nigerian who needs dollars for personal travel and business travel allowances, a forex market is a place where he can use the Nigerian currency to buy dollars to meet his foreign needs. Currently, the naira isn’t in good shape as the Central Bank of Nigeria struggles to stabilize the fx market, check other weak currencies on the continent at: https://infomediang.com/weakest-currencies-africa
But the fx market is even more than that. Millions of dollars, naira, pounds and other currencies you can think of are made every minute trading currencies, most especially pairing two currencies with the hope (bet) that one will outperform the other.
For instance, there are traders who place a bet on the movement of a currency over another, if his prediction is right, he makes a profit, otherwise, he loses.
In a situation whereby you are inexperienced or too busy to trade, you can commission a broker to handle your trade for you.
Whatever the case may be, you can make a lot of money from the fx market by investing in it. Particularly for an investor in Nigeria at a time naira is ridiculously losing its value, one of the best ways to preserve your investment is in US dollars, Pounds, and euros. These currencies have maintained their gain over naira in the past year.
Here are the six ways you can invest in forex exchange to make profit:
- Buy foreign property
- Forex Trading Account
- Adsense Earning
- Multinational Corporations
- International Services
- Foreign Bond Funds
Buy foreign property
At the time of unimaginable inflation in a country like Nigeria, one of the ways to retain the value of money is to invest in foreign real estate. YES, you read that right. Investment in United States real estate, UAE property won’t be a bad idea.
This way, you’re using your own currency to buy another in exchange for a property that will keep yielding foreign currency in revenue for you.
That sounds great, right?
You can also reinvest in real estate in your home country in top-notch locations in Lagos like Lekki, Ikoyi, Ibeju-Lekki, Ikeja etc.
So, let’s take a look at why your investment in foreign real estate will bring in forex gains for you.
While you sleep, your property keeps bringing in forex in United Arab Emirates Dirham for you. And the merits of investing in UAE property are numerous. Some of them include:
Tax-free income policy
In UAE, all that you earn belongs to you because of the country’s tax-free income policy. You don’t have this in the United States, Britain, or any African country.
High Rental Income
Do you know that it’s even cheaper to buy property in UAE compared to other countries like London and New York? For instance, you can purchase a one-bedroom apartment in the country for AED950,000 and rent such an apartment for as high as 55,000 AED/year.
In less than 18 years, you are sure of getting your investment apart from the fact that real estate and the value of property keeps appreciating.
We’re not even talking about reinvesting the yearly rent you make from an investment. For instance, your AED55,000 is valued at over N6,000,000 in Nigeria in a year from a one-bedroom apartment over there.
Research has also shown that rental income on property in UAE is more than what you get in London or New York property.
Through this means, you earn in foreign currency and reinvest in real estate in your own economy or other high-yielding investment.
Forex Trading Account
Using this method, opening an account with an FX broker should be your option. This will enable you to trade currencies from around the world.
It’s a little beat technical, you have to choose the best broker that has multiple currencies you can trade in. This way, you will be able to trade in pairs.
Simply put, you are predicting or betting that one goes up (long) and the other will go down (short).
You need to know the intricacies of a trading account. FBS, IQ option, and forex time are some of the platforms you can use.
Forex trading in Nigeria is now a popular means of income for hundreds of people, but many other people have also lost millions of naira through dubious brokers who promised incredible return in short time.
How does Adsense earning relates to forex trading? It isn’t directly linked to trading, but technically, you are trading your content to earn in dollars, Pounds, or any other popular currencies Google pays its publishers at the end of the month.
When you’re paid, your Adsense earnings are converted back into Naira, so, you can calculate how much you would make from $2000 earnings when converted into Naira.
Simply put, buy shares in multinational companies, that’s companies that have international exposure
Your shares simply mean you’re a stockholder who is indirectly participating in the foreign currency markets through their ownership in firms that do significant business in foreign countries. Some of the popular ones are Facebook, McDonald’s, Coca-Cola among others.
The revenues and profits derived from overseas operations are boosted if the foreign currency appreciates versus the Naira.
When you convert your dividend which is possibly in USD or any other stronger currencies back to naira, it means turnover for you.
Provide International Services
App developers, creative content writers, international speakers, professional language translators are some of the remote services that are increasingly in demand by US, UK companies and individuals around the world.
Some of the employers pay in pounds or US dollars. Earning in foreign currencies that have more value than your currency is one of the ways to be one of the players in the forex market indirectly.
When the currencies gain over your local currency, you make more money. It’s like using your skills to invest in forex.
Thankfully, the advent of online payment systems like PayPal, Payoneer among others have made receipt of payment easy.
Imagine you have an accumulation of $10,000USD in your dollar account at a time the USD gained significantly against the Naira?
Foreign Bond Funds
Investing in international government bonds enables you to turn in interest denominated in the foreign currency, it’s common to see investors invest in currencies that have power over their local currency.
Some of the popular ones you can choose are Vanguard Total International Bond ETF, SPDR Bloomberg Barclays International Treasury Bond ETF, and iShares J.P. Morgan EM Corporate Bond ETF among others.
To begin with, you have to set up an international trading account and your broker will provide you a list of bonds where you buy and the market’s price.
However, this doesn’t come without risk.
NOTE: ETFs means Exchange-traded funds
A big shoutout to unsplash.com for providing a free photo for this article.