The Nigerian stock market is on a bull run and is up about 30% this year. Nigerian stocks have become much easier to invest in over the years thanks to technology.
Appetite for Nigerian stocks is growing as NGX data for the eight months ended August 31 showed total trading reached N2.42 trillion in August, up from N1.89 trillion reported recorded in the first 8 months of 2022.
Transactions by domestic investors increased from N1.585 billion in eight months of 2022 to N2.19 trillion in August 2023.
The key to growing wealth and keeping up with high inflation and the devaluation of the naira is to invest. Inflation has eroded the purchasing power of the naira over time.
As a result, if you do not invest in a valid instrument, the value of your monthly savings from your income diminishes daily.
The NGX data also affirms that Nigeria’s richest men (Aliko Dangote, Femi Otedola, Mike Adenuga, Abdul Samad Rabiu, Jim Ovia, and Tony Elumelu) all have high exposure in the Nigerian stock market.
So, here are some tips you need when considering investing in the Nigerian stock market.
Choose an SEC-compliant investment bank or regulated broker/ Open an investor account
Investors appoint brokers to execute buying or selling instructions on their behalf. A stockbroker is a broker registered with the SEC and a member of the Nigerian Stock market
When choosing a stock brokering firm, it is critical to consider ease of access, affordability (as some companies require a minimum deposit to open an account), integrity and reputation, and their standing with the Securities and Exchange Commission (active or inactive).
The moment you decide to trade on the Nigerian Stock Exchange, you become an investor. Therefore, you will need an investor account. Personal accounts are issued only to investors and are linked to their names.
Before you start trading stocks in Nigeria, you need to open a brokerage account with one of SEC licensed stockbrokers in Nigeria.
When making the request, you will need to provide means of identification, banking information including BVN, passport photo, signature of account holder, and contact information of relatives (if personal account).
The opening takes less than 24 hours as long as you have a bank account.
Some brokers also have online trading platforms, which means you don’t need to visit the broker in person. Just visit their portal or their app for all the information they need.
Investing in the stock market requires patience, a long-term vision, and a deep understanding of the NGX market cycle. Stay informed on economic and political developments in Nigeria that may impact the market.
There is no guarantee of profit.
Experts usually advise investing money you can afford to lose and be prepared for market fluctuations.
If you want to improve your trading skills, you need to continue learning about the markets and trading as much as possible. Long-term success depends on developing analytical skills and emotional intelligence
Diversification is a basic principle of investing. This involves spreading your investments across different sectors and companies to minimize risk. Investments can include the financial, consumer goods, healthcare, telecommunications, and healthcare sectors, among others.
The company’s market value should also be considered when investing.
While large-cap stocks like Nigerian banks and blue-chip stocks are quite liquid (easy to buy and sell), mid-cap stocks and small-cap stocks can offer higher growth. potential but with a higher risk
To learn more about Nigerian stocks, it is best to read books and other financial news-related materials such as Nairametrics and Bloomberg to follow up with market updates.
Understanding how and when markets move will help you better understand why they move. You must include risk mitigation measures such as negative balance protection in your strategy.
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