Here’s for everyone asking how to start investing on the Nigerian Stock Exchange, the things to look out for, or how to navigate the market. I have put this together because there are lot of similar questions in the DM.
Follow this simple and practical guide if you are new or you have been investing but don’t know what to look out for in making informed decisions.
1. Get Financially Ready
Set aside funds specifically for investing (not emergency savings). Understand that investing is long-term and involves risk.
2. Open a Stockbroking Account
Choose an active, registered stockbroker licensed by the NGX. See the list here on their website… don’t choose an “INACTIVE” broker, please!
https://ngxgroup.com/exchange/trade/becoming-an-investor/find-a-broker/
You’ll need: a valid ID, utility bill, passport photo, and completed KYC forms to open an account.
3. Get a CSCS Account
Your broker will help you open a Central Securities Clearing System (CSCS) account. This is where your shares will be held in electronic format. You can also sign up with CSCS to have online access to your account. You will be able to view your holdings, see price history, and track movements in your portfolio in real-time.
4. Fund Your Brokerage Account
Transfer money from your bank to your brokerage account. Confirm how long funding takes and if there are minimum deposit requirements. Some brokers might have a minimum deposit requirement. Give the one you choose a call to find out.
5. Learn Basic Investment Terms
Understand key terms like: Dividend
Earnings per share (EPS)
Price-to-Earnings (P/E) Ratio
Market Capitalization
Volume and Liquidity
Bull vs Bear market
And so on
6. Research Before Buying
Don’t buy based on hype or popularity
Focus on companies with:
Strong financials
Consistent dividends
Solid business models
Good management
7. Place Your First Trade
Place your trade or mandate with your broker or via their online trading platform.
8. Track & Review
Monitor your investments occasionally. Check quarterly financial reports of the companies you invest in. Read annual reports and market news. Don’t panic during short-term dips, especially if you are a long-term investor.
9. Keep Learning
Follow reliable investment voices, listen to business news, global affairs and check NGX website regularly for corporate news and disclosures. Read books on value investing and personal finance. I listed some books I have read last week.
10. Think Long-Term
Don’t chase quick profits.
Reinvest dividends, be patient, and let compounding do the magic for you.
