appreciation
Appreciation is when an asset, like a plot of land, a stock, or a currency, becomes worth more over time than what you originally paid for it.
In plain English
Think of that plot of land your uncle bought in Ibeju Lekki back in 2015, when it was still mostly bush and hope. Today, roads have come, a few estates have sprung up nearby, and that same plot now sells for four times what he paid. That increase in value, without him lifting a finger, is appreciation at work.
In investing, appreciation simply means the price of something you own has gone up. It could be shares you bought on the Nigerian Exchange, a house in Lekki, gold, or even dollars sitting calmly in a domiciliary account while the naira weakens against them. If you bought MTN shares at ₦180 and they now trade at ₦250, that ₦70 gap per share is appreciation, and it exists on paper until you sell.
A Nigerian example makes it clearer. Say you bought 1,000 shares of Zenith Bank at ₦30 each in 2022, spending ₦30,000. By 2024, the price climbs to ₦45. Your shares are now worth ₦45,000. You have not touched the money, but your wealth has grown by ₦15,000 simply because the market decided your asset was worth more.
In the United Kingdom, people talk about house appreciation the same way. Someone who bought a flat in Manchester for £150,000 in 2018 might find it valued at £190,000 today, even though they never renovated a single room. The bricks stayed the same, but demand and time did the work.
It is worth remembering that appreciation is a gain on paper until you sell and lock it in. Markets can also reverse, so what appreciates today can depreciate tomorrow. Still, understanding appreciation helps you see why patient investors often do better than those chasing quick wins.
You buy shares in a company for ₦500,000. Two years later, the same shares are worth ₦750,000. That ₦250,000 increase in value is appreciation, and it becomes real money only when you sell.
Questions people ask
Is appreciation the same as profit?
Not quite. Appreciation is the increase in value while you still hold the asset. It only turns into actual profit once you sell and the money lands in your account.
Can an asset depreciate after appreciating?
Yes, definitely. Markets move both ways, so a stock or property that appreciated last year can lose value this year if demand falls or conditions change.
What kinds of assets appreciate the most in Nigeria?
Land in growing areas, foreign currency savings during naira weakness, and shares of strong companies have historically shown good appreciation, though none of them are guaranteed.
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