Investors urged to ditch one-dimensional strategies

By : Azeez Kareem

Date: 4 December 2025 3:46pm WAT

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Financial analysts are urging investors to reconsider one-dimensional investment strategies as heightened market volatility

Financial analysts are urging investors to reconsider one-dimensional investment strategies as heightened market volatility

Financial analysts are urging investors to reconsider one-dimensional investment strategies as heightened market volatility, persistent inflation and shifting interest-rate policies reshape the global and Nigerian financial landscape.

Single-asset investment approaches, once favoured for their simplicity and perceived safety, are increasingly being deemed inadequate in an era marked by economic uncertainty and rapid market swings.

Analysts say concentrating capital in one asset class — whether equities, real estate or fixed-income instruments — now exposes investors to higher risk than in previous decades.

In Nigeria, many retail investors traditionally allocate the bulk of their funds to land, listed shares or short-term fixed deposits. While these assets remain important parts of long-term wealth creation, experts warn that excessive dependence on any single category can amplify losses during market downturns and policy shocks.

Global monetary conditions have changed sharply since the aftermath of the COVID-19 pandemic.

Interest rates were slashed to historic lows to stimulate economies, before being raised aggressively in many countries as inflation surged.

Nigeria followed this pattern, with tightening monetary policy affecting bond values, borrowing costs and equity market performance.

Inflation has remained a persistent challenge, eroding the real value of savings and weakening purchasing power.

Rising prices of food, fuel and essential services have made it harder for investors to preserve capital using traditional low-risk instruments alone.

Technology has further transformed the investment environment. The rise of digital finance platforms, alternative asset classes and cross-border investment tools has expanded access to markets but also introduced new layers of complexity and volatility.

Younger investors, in particular, are entering the market with different expectations, favouring flexibility and digital-first solutions.

Against this backdrop, financial advisers increasingly advocate diversification as a more resilient investment approach.

Rather than concentrating funds in a single asset class, diversification involves spreading investment across equities, fixed-income securities, real estate and other instruments to balance risk and return.

The logic, analysts say, is straightforward: no single asset class performs well under all economic conditions. When interest rates rise, bonds may become more attractive while equities face pressure.

During periods of high inflation, real assets can help preserve value. By holding a mix of assets, investors are better positioned to absorb losses in one area while benefiting from gains in another.

Diversification also supports more structured financial planning. Liquid instruments can serve short-term needs, while longer-term assets such as equities and bonds can be aligned with future wealth-building goals.

This balance, experts argue, reduces the need for frequent market timing and speculative decision-making.

Institutional investors in Nigeria, including pension funds and asset managers, have increasingly adopted diversified portfolio strategies in response to volatile market conditions.

This shift reflects a broader recognition that long-term stability requires balanced exposure rather than concentrated risk.

Market strategists say the era of predictable returns from single-asset investments has largely passed.

With interest rates uncertain, inflation persistent and currency volatility shaping outcomes, investors are being urged to prioritise resilience over simplicity in their portfolio decisions.

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