Investing has been one of the ways by which man attain financial freedom. These investments could range from real estate, cryptocurrencies, stocks, bonds, shares and a host of many others. For this article, we’ll be narrowing our focus to the stock market, specifically on how to buy Nigeria stocks as a beginner having no prior experience.
From the name, although sounds complicated but the real deal is, that the stock buying process is not as complex as it sounds. However, you will have to carry out deep and proper research as well as know the language of the market before making your first purchase. The process of buying stock would include having an account with a brokerage firm that won’t take up more than 15 minutes. The next step is to add funds to your account.
To know the steps to follow to spot the best companies to invest in, we recommend using the following guidelines.
Before we talk more about how to buy stock, let’s try to find out the meaning of stock as well as its importance.
WHAT IS A STOCK?
Companies issue stocks to raise capital paid up or share, to grow the business or undertake new projects. There are important distinctions between whether somebody buys shares directly from the company when it issues them (in the primary market) or from another shareholder (on the secondary market).
Generally, the stock is a term used to describe the ownership certificates of any company. A share, on the other hand, refers to the stock certificate of a particular company. Holding a particular company’s share makes you a shareholder.
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TYPES OF STOCKS
Categorically, there are two types of stocks namely common and preferred. The difference between the two is that, while the holder of the common stock has voting rights that can be exercised in corporate decisions, the preferred stockholder doesn’t. However, preferred shareholders are legally entitled to receive a certain dividend payment before any dividends can be issued to other shareholders.
THE IMPORTANCE OF INVESTING IN STOCKS
Historically, long-term equity returns have been better than returns from a cash or fixed-income investments such as bonds. However, stock prices tend to rise and fall over time. Investors may want to consider a long-term perspective for their equity portfolio because these stock-market fluctuations do tend to smooth out over longer periods.
Taxes and inflation can impact your wealth negatively. investing in stock otherwise, equity investments can be your advantage as an investor to better tax treatment over the long term, which can help slow or prevent the negative effects of both taxes and inflation.
Some companies pay shareholders dividends1 or special distributions. These payments can provide you with regular investment income and enhance your return.
How To Buy Nigeria Stocks?
Choose An Online Stockbroker
This is the most crucial as well as the first step to take to buy stock. See it this way, if you want to start saving, the first step is to get yourself an account with a bank. You must be associated with a bank to be able to carry out this operation. The same thing goes with buying a stock which is to choose a reliable stockbroker. To point out, one of the easiest methods to buy stocks is to use an online stockbroker.
Once you create and deposit into your account, you can buy shares and stocks online through the website of the broker. Another option is to use an all-inclusive stockbroker or buy shares directly from the company.
The process of opening an online account can be as simple as opening a new bank account which involves completing an application for the account with a photo ID and deciding if you want to add funds to the account using an electronic fund transfer.
Open Investor’s Account
Once you decide to buy stock and open a stock brokerage account, you are becoming an investor. This will prompt you to have an investor’s account. Investor accounts are uniquely attributed to investors and are tied to their names.
You would normally open it along with a CSCS account, into which you would be able to transfer your stocks. Online options are opened for you by a stock brokerage firm or broker. Using an online broker presents you the opportunity to trade securities or any other investment instrument online.
Your broker buys stock in your investor’s account each time he wants to buy for you. You can also buy bonds through the account.
Do your research on the stocks you’d like to purchase
Once you have created as well as deposited into an account with a brokerage, you now have the access to selecting stocks.
Don’t let your emotions step in when you get a flood of information and live market fluctuations overwhelm you when you conduct your study. Make your goal clear. The goal is to find businesses that you would like to be a part-owner of the best stock brokers.
Most of the data and tools you need to evaluate and analyze the company can be found on the broker’s website, for example, transcripts of SEC filings of quarterly earnings reports from conference calls, as well as last News. Many online brokers provide instructions on how to use their tools, as well as basic training on how to choose stocks.
Determine How Many Shares You Will Purchase
Remember that your goal towards investing is to build over time through compound interest. You shouldn’t feel pressured to buy a specific number of shares or what your entire portfolio is worth at the same time. Start small, buying stock to see the experience of owning individual stocks and if you are prepared to weather tough times with the minimal loss of sleep. You can increase your stake when you have mastered the swagger of shareholders.
Stock investors just starting to be interested in fractional stocks, a new option from online brokers that allows the buyer to buy a small portion of a share rather than the entire stock. This means you can invest in expensive stocks, such as Google and Amazon, which are famous for their four-figure stocks with less money. SoFi Active Investing, Robinhood along with Charles Schwab can be found among the brokers offering fractional shares.
Never Stop Learning
Quite true that the stock market can be predicted and analyzed, there is no such thing as a 100% guarantee, and it’s not rocket science. If you want to up your game and get better at investing as well as your trading skills, you must continue to learn about the market and trade as much as possible. Long-term success depends on developing analytical skills.
You have to develop a reading culture to study the market. For example, to learn about Nigerian Stocks, it is best to read books and other financial news-related materials like Nairametrics, and Bloomberg, to understand the history of the markets. This gives you clarity on how and when the markets fluctuate and which will give you a better understanding of why they do.
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The analysis above presents you with a better understanding of the stock market, and how it is important to you. The point I’d like to stretch out more is about knowledge. As the saying goes, if you’re not informed, you’re deformed. It’s best advisable to invest more in your knowledge and never stop learning.