Nowadays, Nigerians don't want to lack behind about trends happening in the stocks market; they're now showing continual interest in investing in stocks. According to data gathered, investors have seen gains exceeding N40 trillion under Tinubu’s administration.
This is just to show you how well the Nigerian Stocks market is progressing overtime. This is why we decided to compile in details the step by step guide beginners can follow to invest in the NIGERIAN stocks markets.
How to Invest in Nigerian Stocks Market
Learn the basics
As a beginner, the first thing you must learn when considering diving into stocks investment in Nigeria is to understand how the Nigerian stock market operates. You can begin with following up company's earnings, get updates on major ETFs, and stock market indices like the All-Share Index, NSE 30, and various sectoral indices.
In simple words, the basics you may need to familiar yourself with as a starter may include understanding the real definition of Nigerian stocks, how the Nigerian Stock Exchange (NGX) works, and the risks and potential rewards of investing in equities.
You can get your hands on materials such as courses from stock brokerage firms to improve your learning speed.
Choose a Licensed Stockbroker
You cannot directly buy stocks on the NGX as an individual. You must go through a stockbroker licensed by the Securities and Exchange Commission (SEC). As you must know that individual investors hire brokers to execute buy and sell orders.
To choose a licensed stockbroker, you need to visit the NGX website to see a list of licensed brokers at ngxgroup.com. Some popular brokers listed there include Meristem, ARM Securities, Stanbic IBTC Stockbrokers, and CardinalStone.
You can compare these brokers based on their fees, trading platforms, and customer support so that you can choose the best one that can hand your selling and buying orders as you want.
Open a Brokerage Account
First of all, before you open an account with a broker, here are things you need to consider:
- Accessibility,
- The Broker Fees, whcih include the initial deposit
- The Broker Reputation
- The Broker Trustworthiness
- And if the broker firm is registered with the SEC.
Once you put that into consideration and you've chosen your preferred broker, then open a Central Securities Clearing System (CSCS) account through the broker. This account holds your stocks in electronic form.
Requirements to Open a Brokerage Account
To invest, an individual must open an account, as only retail investors are allowed to operate personal accounts. Prior to setting up a trading account, investors are required to submit documents to their brokers that fulfill Know-Your-Client (KYC) regulations.
So, you'll need:
- Bank Verification Number (BVN)
- Government-issued Valid ID Card
- Proof of Address Document
- Passport Photo
However, it's important to note that opening an account and trading of securities in either the primary or secondary market must be carried out through a registered securities dealer or an authorized NGX trading license holder.
Fund Your Brokerage Account
The funding process is simple. You don't necessarily need United States Dollars (USD) to fund your brokerage account; you can add money to your brokerage account using the Nigerian Naira (NGN). Infact, some brokers accept direct local bank transfers, facilitated from any Nigerian banks.
So, all you need to do is confirm the broker minimum funding amount and transfer your preferred amount to the designated account on your account. Just make sure that the amount you're adding does not go below the minimum funding requirement.
Choose the Stocks You Want to Buy
The best way to choose the right stocks is explained here:
- First of all, do market research as we've explained earlier that you can begin to follow up with your favorite companies's shares and stocks by getting their latest revenue news and news related to their financial status.
- Secondly, it's very important to analyze the company financials status as I have stated above, study the company stock performance and market trends, and check the company's dividend history if you’re interested in income investing.
Once you put all these considerations into actions, you'll be able to choose the right stocks you can trust. You can use platforms like Proshare, Bloomberg, or NSE’s official site for data.
Buy your Stocks
After you've chosen your preferred stock(s), the next thing to do is to place your order on your brokerage account.
Here's how to buy stocks in Nigeria
- Log into your broker’s platform. This can be a web application or mobile app, depending on the one your brokerage company is offering.
- Enter the stock ticker symbol. For example GTCO for Guarantee Trust Holding Company PLC.
- Specify the quantity and type of order. This can be Market or Limit.
- Confirm and submit the order. Your broker will execute the trade and update your CSCS account.
The processes are simple right? If you're confused, you can simply contact your broker customer service center to put you through on how to use their platform to buy the stocks.
Monitor your Stocks
This is the last steps. It's important to keep track of your stocks company's market news and updates, the company announcements, and also your portfolio performance. This helps you make informed decisions about holding, selling, or buying more shares.
If you invest in dividend-paying companies, dividends will be paid to your linked bank account or reinvested depending on your preference.
Attend investment webinars, follow market analysts, and read finance news. The Nigerian stock market can be volatile, so continuous learning is key to survive and thrive in the market.
