Looking for how to buy shares in Nigeria? If you’re interested in investing in the Nigerian stock market, there are some major things you should know. Buying shares in Nigeria requires a basic understanding of the stock market and the investment opportunities available.
In this guide, we’ll walk you through the process of buying shares in Nigeria, so you can invest with confidence and potentially reap the rewards of a growing economy. This guide was also reviewed by a stockbroker to ensure the information in this blog is accurate and also up-to-date.
Step-by-step Guide To Buying Shares In Nigeria
Investing in the Nigerian stock market can help you make money and spread out your investments. But before you start investing, it’s important to understand that buying shares in the Nigerian Exchange Group isn’t like shopping at a store.
There are specific procedures and rules you need to follow. That’s why we created this step-by-step guide to help you buy shares in Nigeria. We’ll show you how to open a brokerage account and make your first trade, so you can invest with confidence.
Step 1: Find the Perfect Stockbroker
If you want to buy shares on the Nigerian Exchange Group, you’ll need a stockbroker to help you. A stockbroker is someone who can buy or sell shares for you. Only certain firms are allowed to trade shares on the NGX – they must be members of the Nigerian Stock Exchange and registered under the Securities and Exchange Commission (SEC). So, it’s important to check that the broker you choose is registered with the NGX and the SEC.
Different stockbrokers have different fees, levels of support, and financial advice. So, choosing a stockbroker who meets your specific needs and investment goals is crucial. Take your time to research and compare brokers to find the perfect one for you. Look for a broker who can offer you the services and support you need, and make sure they have a good reputation and are properly registered.
Step 2: Open an Account With Your Preferred Broker.
When you want to open a share dealing or trading account, you’ll usually need a CSCS account. This is an account where your shares are held. Your stockbroker or trading company will set up an online account for you and give you a CSCS account number.
This number is essential because it helps CSCS keep track of your shares. It will be attached to every share you buy so that CSCS can see your many shares and which companies you’ve invested in.
Step 3: Deposit Money Into the Account You Created (trading account)
After establishing a verified account with a brokerage, you must fund your account. This cash would be utilised for trade purposes. Some brokers permit direct bank transfers from your bank to theirs.
You may download a broker’s app on your phone or PC to better understand their services and make trading easier. The software serves as the trading platform for online brokers. As a result, you must download the version of their software that is compatible with your smartphone. This allows you to track your trades and stock price movements conveniently.
Step 4: Investigate Many Firms and Their Shares to Choose Your Most Preferred Firm
After establishing and funding an account with a brokerage firm, you’re ready to start picking stocks. When conducting your research, don’t let the flood of information and live market fluctuations overwhelm you. Make your objective clear.
When you work with a stockbroker, they’ll give you an overview of what’s happening in the business world. They’ll help you understand the numbers you see in the news. You can find lots of information and tools to help you analyse companies on the broker’s website. This includes things like transcripts of meetings where the company talks about its earnings, as well as news articles.
If you use an online broker, they’ll usually give you instructions on how to use their tools. They may also offer basic training to help you choose which stocks to buy.
Step 4: Decide How Many Shares You Will Buy
You should never believe that you must buy a specific amount of shares or your whole portfolio all at once. Begin with acquiring a single stock to understand what it’s like to own a single stock and whether you’re prepared to take on greater risk.
As your experience grows, you can invest more and expand your portfolio. A new option from online brokers allows consumers to acquire fractional shares rather than the entire unit, making fractional stocks an intriguing choice for beginner stock investors.
Step 5: Order Your Favourite Shares.
When buying and selling stocks, two of the most common orders are:
1. Market Orders
A market order shows that you intend to buy or sell the shares at the highest market price at the time of purchase. Because a market purchase has no price limitations, the order will be filled immediately and entirely if you try to buy a million shares and then take control. Don’t be surprised if the amount you pay or receive if you sell your thing differs from the price you gave a few seconds before. Throughout the day, the bid and ask prices fluctuate.
2. Limit Orders
Investors who buy and sell smaller trading equities, which are more likely to be based on spreads because of investor activity, may benefit from using limit orders. When the stock market is volatile, or the price is more important than order fulfilment, they make an excellent investment.
Step 5: Keep Improving Your Stock Collection Over Time
To avoid losing money in the stock market, it is important to improve your stock portfolio continuously. Simply buying shares is not enough, you must consistently assess whether your stocks align with your investment objectives in Nigeria.
This means you should periodically review your portfolio to see if any stocks no longer fit your objectives. If you find any such stocks, it may be time to sell them and invest in others more aligned with your goals. Doing this can increase your chances of making profitable investments and avoid unnecessary losses.
Who is a Shareholder?
A shareholder refers to an individual, company, or institution that possesses at least one share of a company’s stock or a mutual fund. By owning a part of the company, shareholders have certain privileges and responsibilities. They can enjoy the benefits of a company’s success, including receiving declared dividends if the business performs well.
Shareholders, also known as stockholders, can vote on specific matters related to the company and may be elected to the board of directors. Common and preferred shares vary in price and grant shareholders differing proportions of the company’s profits, with or without voting rights.
In small to medium-sized private companies, shareholders often play a critical role in the management of the business. However, in larger, publicly traded corporations, the responsibility for day-to-day decisions lies with teams of managers.
What is The Stock Market?
A stock market, also known as the equities market, is a platform where publicly owned companies can offer their shares to interested investors who can buy or sell them. These shares can be traded through centralised exchanges or over-the-counter (OTC) marketplaces, creating a free economy market that benefits investors and companies by providing access to capital.
Best Time to Buy Shares in Nigeria
If you want to invest in Nigerian stocks and earn a lot of money over time, one strategy is to buy when the price drops. This is called “buying the drop.” When the price of a company’s shares drops suddenly, and many people panic and sell, experienced investors take the opportunity to buy as many shares as they can.
They believe the price will go up again in the future, and if they’re right, they could make a lot of money. This strategy takes patience because the price might take a while to go back up. It can also pay off in the long run if you’re willing to wait.
What You Need to Register With a Broker
If you want to trade shares on the NGX, you first need to create an account with a stockbroker. This account will give you a unique Clearing House Number (CHN), which you can use to deposit funds into your trading account.
Once you have deposited funds, you can buy and sell stocks through your broker’s online trading platform. Your stockbroker will handle the back end of the trade for you.
It is also essential to have a Central Securities Clearing System (CSCS) account when buying shares in Nigeria. Nigerian stockbrokers create and maintain this account, allowing you to manage your portfolio independently. The cost for this account is typically between N2K and N5 K per year, and it is a fantastic way to keep track of your investments.
List of Top 10 Brokerage Companies in Nigeria
- Cardinalstone securities ltd.
- Meristem securities ltd.
- GTI capital ltd.
- Apt securities and funds
- EFG Hermes Nigeria Ltd.
- Cordros securities ltd.
- Stanbic IBTC stockbrokers ltd.
- Chapel hill denham securities ltd.
- CSL stockbrokers ltd.
- Morgan capital securities ltd.