Shares can be a vital part of your financial portfolio. Learn how to buy shares in Nigeria the right way.
Adding shares to your financial portfolio could be a very important move. By buying stocks in companies like GTBank, Dangote Group, MTN, Nigerian banks, Facebook, and Coca-Cola, you could increase your savings, protect your money from inflation and taxes, and get the most out of your investments. It’s important to know that investing in stocks involves risk, so this article tells people who are just starting out how to buy shares in Nigeria.
1. Establish an account with a broker
The first thing you need to do to buy shares in Nigeria is to open an account with a financial brokerage firm. This account will be your link to the Nigerian stock market.
2. Make deposit and acquire ID
Get your trading number, which will function as your identifier on the Nigerian stock exchange, after depositing dollars into the account.
3. Analyse the Nigerian stock market
Before buying shares in Nigeria, research the stocks you intend to buy so that you can make the best choice. To start, you must gain a thorough understanding of the stock market.
To develop experience, we advise starting small and avoiding buying a large number of stocks. You can also purchase and sell Nigerian shares using a demo account without taking any risks.
Only invest in Nigerian stocks if you have researched the nation’s economic development and trust its trading partners.
Avoiding online deception, disinformation, mental distortion, and manipulation is also advisable.
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4. Select the kind of request
When purchasing shares in Nigeria, you must decide on the type of demand because you will see both the ask price and the bid price at the time of purchase.
The amount at which sellers are willing to sell their stock shares is known as the “ask price.” The price that potential buyers are willing to pay to purchase a share is known as the bid price. The “spread” is the name given to this discrepancy.
5. Start buying
Following the completion of the aforementioned steps, you can start purchasing shares of Nigerian stock through the Nigerian stock exchange, your brokerage, or even by getting in touch with your financial advisor in person at the stock exchange.
6. Regularly enhance your stock portfolio
It is not enough to simply purchase shares in Nigeria; you must also determine whether the shares already in your portfolio still suit your needs in order to avoid losing money on shares that are no longer suitable for your goals.
Before beginning any investing endeavour, you must assess your financial resources, define your investment objectives, and be completely prepared to assume responsibilities.
You must recognise that the Nigerian stock market swings frequently owing to supply and demand, company performance, and global events, and bear responsibility accordingly.
You must have well-defined investing objectives. Is the objective amusement or profit and investment? You must also be eager to build a strategy for the progression of your investing process, including when to purchase and sell and when to maintain the status quo.
Best time to buy shares in Nigeria
The greatest time to purchase shares in Nigeria is when they are on the decline as a high-return strategy. Investors that want to strengthen their stock market position and make long-term returns employ this tactic.
When the price of a company’s share decreases dramatically and unexpectedly, buying the dip appears as a trading technique. This is because novice investors tend to sell their shares fast to avoid further losses, while seasoned investors acquire as many of these shares as they can.
They believe that when it is at its lowest, it will eventually rise once more, bringing about great gains over the long run.
Benefits of buying shares in Nigeria
1. Value appreciation
In general, the long-term performance of shares is superior to that of cash or fixed-income products such as bonds.
However, the prices of stocks vary. As the influence of stock market swings tends to diminish with time, investors may choose to adopt a long-term perspective for their stock portfolio.
Inflation and taxes may damage your wealth. By investing in stocks, investors may take advantage of favourable long-term tax treatment, which can mitigate or minimise the unfavourable consequences of these two variables.
3. Maximise income
Some corporations pay dividends or special distributions to their shareholders so that they may generate consistent investment income and a greater return.
In addition, the favourable tax status of Nigerian stocks enables their owners to keep a larger share of their earnings. (Note that dividends paid by firms based outside of Nigeria are taxed differently.)
4. Capital expansion
A stock’s price swings over time. When the price of a stock rises, shareholders might opt to sell it for a profit.
5. Dividend earnings
Numerous organisations provide dividends to their owners, which may be a tax-efficient source of revenue.
6. Freedom to vote
A shareholder’s ability to vote entails a measure of influence over the selection of the board of directors and the management of the firm.
Typically, common stocks are traded more often than other types of investments, such as real estate, artwork, or jewellery. Therefore, investors may readily purchase or sell them for cash.
8. Favourable tax treatment
Income from dividends and capital gains are taxed at a lower rate than income from wages and bond interest.