Everyone, in Nigeria, and every other part of the world wants to make money and be financially free. As you should already know, there are many ways of making money and investing remains one of the top ways of making money. In Nigeria, there are a lot of things you can invest in. However, if you choose to invest traditionally, one of the earliest forms of investing, you should consider investing in shares.
Many people see investing in shares as complicated and perhaps not as productive as other investment methods. The truth is, buying shares is still one of the best investments a person can make especially in terms of security and sustainability. So, what are the processes involved in buying shares in Nigeria. I’ll be answering the question, How can I start buying shares in Nigeria, in this article.
What Is A Share?
Shares represent a percentage part in the ownership of a firm or organisation. Depending on the form of shares, you own a portion of the company and are entitled to assets and earnings. The term outstanding shares refers to all shares held by third parties. For example, if a company has 500,000 shares and you hold 50,000. This means you hold 10% of that company’s shares. Companies can be publicly traded or privately held. Founders, management, or private investors own private enterprises. Except for the owners, founders, and board of directors, the public can invest in public enterprises.
How To Buy Shares In Nigeria
Buying shares on the Nigerian Exchange Group is unlike any other purchase. The NGX floor is not a grocery store where you may load shares into a shopping cart. To acquire shares listed on the Nigerian Exchange Group, you need a stockbroker. Brokers’ fees, support, and financial advice vary.
This implies you need to pick a stockbroker who understands your specific demands and goals. The broker will then finish the deal and charge you for their services.
Getting a Stockbroker
To trade shares on the NGX, you must first open an account with a stockbroker. Each investor and trader’s portfolio will be assigned a Clearing House Number (CHN). After receiving your CHN, you can deposit funds into your trading account using your unique number. Once the funds are in your account, you can trade online with your broker.
This allows you to buy and sell stocks without involving your stockbroker. A CSCS account is also required when buying shares in Nigeria. The CSCS is Nigeria’s market aggregator, storing all accounts created and maintained by Nigerian stockbrokers. To access and manage your portfolio, you need a CSCS account. This is the greatest approach to maintain track of your portfolio and costs between N2K and N5K every year.
About The Nigerian Exchange Group (NGX)
A stock market represents corporations that have listed equity shares that public investors can buy and sell. Equities, stocks, or shares are traded on stock exchanges. Companies would not be able to list shares if there were no stock exchanges. Stock exchanges would not exist without a stock market.
The NGX was founded in 1960 as the Lagos Stock Exchange and serves Africa’s largest economy, Nigeria. Nigerian and international enterprises can access capital through the Nigerian Exchange Group. This enables them to access financing markets to fund strategic corporate expansion. The Nigerian Securities and Exchange Commission regulates the NGX.
All listings are included in the All-Share Index of NGX, which was formed in 1984 and has a base value of 100. While there are other types of shares, only common or ordinary shares were included in the index calculation. The NGX is also a founding member of the African Securities Exchange Commission and the World Economic Forum.
About Stock Trading
Stock trading is the act of purchasing and selling shares on a stock market in hopes of a profit. Long-term ownership of shares is considered an investment. The most typical stock trading is buying low and selling high, often on the same day. Day traders rely on slight fluctuations in a stock’s price to create small profits across multiple instruments.
Stock exchanges are secondary markets where all publicly traded shares are listed. Exchanges connect buyers and sellers. So if you want to acquire stock in a corporation, you buy it from other shareholders who want to sell it on the stock exchange.
Every business has shares that the owners claim. When registering a company with the CAC, you normally state that your authorized share capital is N1m, divided into 1m ordinary shares of N1. This indicates your company’s beginning capital is N1million, represented by those shares.
While your capital may grow over time, your shares remain unchanged unless you elect to increase them and re-register with the CAC. When the shares are listed on the NSE, they can be bought and sold like stocks.
Bottom Line
Investing is described as the process of putting money or capital into a business in the hopes of making a profit. To invest, one sets aside money for the future and hopes that it will grow over time, unlike consuming.
It’s important to keep in mind that investing carries some risk.
A typical option for new investors to gain experience with investing is through the stock market. If you’re in Nigeria, you can start investing by buying shares with different companies listed in the NGX. This article contains the info you need to get started.