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How to diversify your assets’ portfolio


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The major investment spikes of wealth growth in history are the Financial Market and Real Estate. They have proven to be a path to wealth says an expert.

This is because they are a long-term, retirement-friendly strategies, proven to be smart income-producing pension replacement. No wonder then that the Pension Fund Administrators (PFAs) raised the amount of pension fund investment in real estate to N250.02 billion, according to the latest figures from the National Pension Commission (PenCom).

This amounts to 2.68 per cent of the total assets of the Contributory Pension Scheme, which stood at N9.32 trillion as at the end of June 2019.

The operators had invested N229.17 billion in real estate as of the end of 2018 from N203.35billion at the end of 2017.


All these lay credence to  a wealth assets manager, Meristem Securities, that says wealth should be built in a way that half your annual income during working years are generated from non-work activities, Thus, there is a need for diversification to your portfolio of assets.

Diversification is important as it eliminates the risk of losing a big chunk of money at once by relying on one asset. Real estate is good at adding diversity to your portfolio given that it does not directly correlate with the financial market. Real estate and financial market instruments do not exhibit same relationship to some of the macroeconomic factors. It can be appreciating rapidly in several areas of the country while at the same time stagnating in other areas.

In every property held for ten-year period, there is usually a two-year period when it does 90 per cent of its total appreciation. Every real estate market repeats the same cycles of appreciation, expansion-over -expansion, decline, high occupancy rate, and then recovery. Every successful investor strategically moves their investment funds to higher appreciating areas every few years; and purchase between recovery and evident appreciation.

Real estate also beats inflation as it can be used to hedge against inflation. It is an appreciative long-term investment with inflation adjusted rental income. It generates a stable passive cash flow from a rental property which can be increased to reflect changes in the general price level. The money never runs out and ensure your assets and income will still be around in the end.

The only setback with real estate is, there is a limit to the number of properties one can manage and maintain without help. Some investors erroneously restrict themselves by insisting on managing their property. This may not be easy due to some problems they could run into which includes; default in payment; maintenance surprises; difficulty in accessing quality tenants and associated logistics like applications processing and background checks.

Real estate investment requires getting the right property in the right location and at the right price. The going concern costs include monitoring cost, maintenance cost, legal cost and more. In managing real estate, it is also necessary to separate real estate investment for retirement and other income. In addition, when financing purchase of real estate, non-recourse financing only should also be used. Personal funds should never be used for maintenance or repairs.

This is where a third-party property management service may be required to manage the property while you get your stable cash flows. These professionals ensure optimal positioning of all resources to assure enough lifelong income for you with minimal risks and reasonable liquidity. A reputable real estate agent with references could assist you find your investment property and plan your estate.

Furthermore, you can still make real estate a part of your retirement savings by investing in our Real Estate Investment Portfolio which adds another level of diversity to your portfolio and generates steady cashflow for you.

To get started, take advantage of our professional expertise towards planning your desired retirement lifestyle.


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