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How to invest in stocks in Nigeria


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It surprises me to know that only few outs of the million population in Nigeria know little about Stocks, even the known entrepreneur knows little on stocks. Whatever be the reason, I relate it to lack of information and detailed guide to the Nigerian stock market so in this article, we strive to give you all you need to know about the Nigeria stock markets, how to buy stocks, tips and advice to investors and overall steps to buying of stocks in Nigeria and more.
One great way to build wealth and enjoy a stable financial status is through investing, investing in bonds, treasury securities, managed funds, properties etc investment remains a necessity and important. And among all this investment plate forms (bonds, treasury securities, managed funds, properties etc) investment in stocks is easy and the most profiting.

Across the world today, buying and selling of stock is a fully fledged business for any to go into either as a stock broker, stock traders etc due to the huge followers and overall acceptance of stock as a vehicle of wealth creation. Either fully into stock as a business or not, stocks still represents an important strategy for financial security.
Doing the research for this post one of my friends asked if stock investing really works. You might as well have asked this question or still asking this question. The answer is an emphatic yes; you can build financial security investing in stocks.

What is stocks?
Stock in financial terms refers to a unit of share or capital by a company through the issue of shares to the public and being traded in the Nigeria stock exchange.
Often, what to do to make money remains the question but after we have made the money the hassle of what to do with it sets, as all understood the need for a secure future, but often many seems to make the wrong turns when cut up in the cross-road of what to do with our money. Broad way out of this cross-road seems to deposit all or most of it into financial institution believing it saves them of needless spending. But considering some negative economic situation say inflation, the choice of saving fails to take a positive effect. Many other options are accessible which have its own detriment,some choose to invest in stock market. Haven defined what a stock is we will study the Nigeria stock exchange which is our case study.
Irrespective of economic and political crisis, In Nigeria and around the world investment in stock had always been a practical mode of financial security.

Steps to buying of stock in Nigeria
Buying stocks its easy though not straight forward as it involves series of step as discussed below.
First step: find and choose a stock broker
Stock brokers are simply companies that helped people buy shares or stocks. Example of stock brokers in Nigeria include: ARM securities, Lead capital, Zenith Securities, UBA Stock Broker.
Second step: assuming you have chosen a stock broker of choice to work with the next step is to fill the account opening form.

Third step: Haven approached the stock broker opening a central security clearing system (CSCS) account is the next step from which you will be allocated with a CSCS account number.

Fourth step: Open brokers account
Opening a CSCS account proceeds opening an account with your broker of choice. It entails filling of forms including your

  • Recent passport photograph, note passport photograph mustn't longer than a month and make sure taking dozens, as they come handy throughout your stay in the stock market.
  • Means of identification: your ID card, Drivers license, voters card, international passport etc
  • Utility bills: you’re electric bill or water bills or any other utility bill. They stand for confirmation of your address of residence.
Note all original copy of this document listed above provided, also photocopied, multiple copies made available as they come handy throughout the process.
Fifth step: funding of broker account
After the above processes, funding of just created broker account for the real buying of stocks follows. Mode of transfer differs and any down to wire transfer.
Sixth step: Process of Trade order
This is where the buying commences; it’s done either through forwarding of trade mandate to the broker or through message to your broker. The broker will then on your behave execute the process and give you feedback in form of contract note in which specification on the buying and selling price and commissions and fees made.
The above steps are the steps that one must undergo in Nigeria to buy stock after which one can start collecting dividends. It’s a secure and transparent yet an ultimately proven a rewarding mode of financial investment
.

How much to invest in stocks

Now, with the above steps you can go about buying of stocks easily. Does this mean that you should close down your account to invest in stocks; do you have to bend to invest? How much will I make in returns if I invest what amount? These are the questions running through your mind. People are often obsessed with how much they will make, forgetting the basic question of How much to invest? What is just the right amount to invest? Knowing how to invest in or how to buy stocks in Nigeria is not enough, you also have to know the right amount to invest, and you don’t have to invest all you’ve earned into stocks.

The answer to this question is to know first how much corpus at the end of the investment horizon. Corpus in this context refers to the total amount of money invested by an investor in a scheme. To know the amount to invest Consideration also to the time for which the most staid invested to build that corpus and choice of the right stock to buy be made.

Illustrations show how much to invest if you want to generate 10 million in 40 years. Considering the above listed reason – 10 million for 40 years (time reason) assuming an investment is at the rate of 12.7% per year (selecting the right stock) is a good stock. Doing the calculation using excel or any other software you will discover you need just invest 7,960 per month.
If for 35 years, to generate 10 million at the same rate of 12.7% then one would need to invest 14,600 per month.
investin in stock



From the above chart, at the same rate for a stock the money invested to realize 10 million differs as the period of realization differs. From the chart the investment is highest at the shortest period (20 years) and smallest at the longest period (40 years). So time and how much intend to realize, considered before knowing the right amount to invest.
If a stock has a ROI of 31.9% then with 7,900 per month one can generate 10 million in 20 years.
Note: no matter how good this above calculations is please be reminded they are just for your consumption and not taken as professional advice. There might be error or variation; this is only to give you a general head view of the topic. Please take note.
But even so, investing is still the only option to financial security do your research and start investing.
 

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