With inflation currently hovering around 16.05%, many Nigerians are increasingly questioning whether fixed-income instruments—now offering between 16% and 18%—still provide meaningful value. The simple answer is yes, and the reasoning is grounded in economic logic.
Even when yields cluster around inflation levels, fixed-income investments continue to offer practical advantages. A return of 16–18% against an inflation rate of 16.05% may appear narrow, but it still translates into a small positive real yield. This is far better than leaving cash idle, where inflation steadily erodes purchasing power.
Fixed-income assets remain a reliable safe haven for conservative investors. Unlike equities, where returns can fluctuate significantly due to market sentiment or economic cycles, fixed-income instruments provide predictable payouts and reduced volatility. For individuals prioritising safety and stability, this dependability carries significant weight.
These elevated yields also reflect government monetary efforts to stabilise the economy. By offering rates slightly higher than inflation, authorities encourage investors to tie up excess liquidity, thereby reducing money supply and easing inflationary pressure. Investors, in turn, benefit from predictable income while indirectly supporting economic balance.
In addition, locking in high fixed rates today can be advantageous if inflation gradually declines. Should inflation fall, the real value of existing fixed-income returns becomes more attractive, effectively increasing purchasing power over time.
Although equities may outperform inflation over long periods, they come with enhanced volatility. For investors whose primary objective is capital preservation rather than aggressive growth, the current fixed-income environment is both rational and prudent.
In conclusion, while fixed-income yields of 16–18% may not produce dramatic real wealth in the short term, they offer an important blend of stability, capital protection, and inflation-level returns. For many risk-averse investors navigating today’s economic realities, fixed-income remains a dependable anchor in their broader investment strategy.
