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How to Invest in Stocks in Nigeria and Make Money

Friend, So you want to know how to invest in stocks in Nigeria and make money? You are not alone. In fact, there are many people who dream of making easy money from the stock market here in Nigeria, but most often than not, they end up losing their hard-earned money because they lack the proper knowledge of how to invest in stocks in Nigeria and make money (or at least minimize their losses). But don’t worry, I have everything you need to know about investing in Nigerian stocks right here on Businessfinancedaily.com

Step 1: Research your company

Before you buy a share of a company in Nigeria, it’s essential that you do your research. Spend time getting to know your company: How big is it? What products or services does it sell? Is it reputable? A reputable company has less risk associated with its stock price. If you have trouble finding information about a particular business in Nigeria, find more than one source; if two sources have conflicting information, take that as a red flag. The more research you do now, the better off you will be later.

Step 2: Know how much you can afford to invest

Before you invest in stocks, you need to figure out how much you can afford to invest and then do it. Experts suggest putting between 10% and 20% of your income into buying shares, but if that’s more than you can afford (and it probably is), start smaller: investing a few hundred thousands of Naira at first should be manageable for most people. Then, aim to increase it by 1% or 2% each year.

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Step 3: Establish your investment plan (long term)

It’s time to establish your investment plan. Your long-term investment strategy should consist of at least 3 different kinds of investment: short-term investments (0-1 years), mid-term investments (1–5 years) and long-term investments (over 5 years). If you want even more options, look into medium term bonds/fixed deposits (2–3 years). Keep in mind that it is important not to combine your different types of investments into one fund.

Step 5: Choose what kind of Trader you want to be

As a first-time investor, it’s important to understand that you have a choice when it comes to how you decide to trade. You can execute trades based off of your research on a discretionary basis, or you can take a more hands-off approach by investing in funds or trading according to technical indicators like Moving Averages. Ultimately, there is no right or wrong answer just make sure that whatever route you choose, it makes sense for your style. For example, if you are a long-term investor who likes to keep his portfolio diversified across multiple asset classes, consider using technical analysis as an additional tool to help confirm signals. Alternatively, if you are an active trader who prefers making quick decisions with smaller amounts of capital at risk (and who likes taking advantage of short-term market swings), then consider using fundamental analysis as your primary framework for evaluating investments.

Step 6 : Register with a Nigeria Stockbroker

When you buy stocks, you are buying a piece of the ownership of a company. In order to invest in Nigerian stocks, then, you must register with a registered stockbroker. If you don’t already have one, ask your bank if they have any recommendations or search online for reviews of stockbrokers or stock brokering firms in Nigeria. Once you ave chosen one, it will help to be an active participant in the Nigeria stock market as they research which companies are undervalued.

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Step 7 : Open a Central Securities Clearing System Stock Account

Before buying shares in any company quoted in the Nigeria stock exchange, you will need to open a Central Securities Clearing System (CSCS) stock account. All Nigerian companies that trade on the Nigeria stock exchanges must have a CSCS stock account. This is where your shares will be held. You can open an account with any brokerage firm in Nigeria. You will need to provide two passport-sized photos, your Bank Verification Number (BVN), any Nigeria National ID card like voters card, drivers license, International passport and proof of address for opening an account.

The minimum initial deposit needed to open a CSCS account is about ₦1 million. If you want to invest more than ₦2 million, your broker may require additional documentation. The good news is that it doesn’t cost anything to set up a CSCS account; some brokers even offer free accounts if you meet certain requirements.

Step 8 : Fund your CSCS Account and Start Trading

When you are ready to start trading in the Nigeria Stock market, you need to open a CSCS trading account. as stated in step 7. Once you have a CSCS account, you can use it to buy shares of Nigerian companies listed on the Nigerian stock exchanges:

Conclusion

You can actually make money by investing in Nigerian stocks. However, it’s important to do your research beforehand so you don’t lose money. To start, read this article How to Invest in Stocks in Nigeria and Make Money allover again as many times as possible and then, once you have got an idea of how things work in the Nigeria stock market, consider signing up for a trading CSCS account with one of our recommended brokers. Happy trading!

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