How to buy shares in Nigeria for beginners [2022]

Shares can be a vital part of your financial portfolio. Learn how to buy shares in Nigeria the right way.

How to buy shares in Nigeria

The inclusion of shares in your financial portfolio might be a crucial investment. By owning the stocks of corporations such as GTBank, Dangote Group, MTN, Nigerian banks, Facebook, and Coca-Cola, you might enhance your savings, safeguard your cash from inflation and taxes, and optimise your investment income. It is essential to recognise that investing in stocks includes risk, thus this article describes how to buy shares in Nigeria for beginners. 

1.Establish an account with a broker

The first step in purchasing shares in Nigeria is to register an account with a financial brokerage firm, which will serve as your connection to the Nigerian stock market.

2.Make deposit and acquire ID

Deposit dollars into the account and then get your trade number, which will serve as your identification on the Nigerian stock exchange.

3.Analyse the Nigerian stock market

Observe the stocks you want to purchase prior to buying shares in Nigeria so that you can make the best decision. You must first grasp accurate knowledge of the stock market.

We recommend beginning with a little sum and not purchasing a huge number of stocks in order to gain experience. Using a demo account, you may also sell and buy shares in Nigeria without incurring any risk.

Invest in Nigerian stocks only if you have analysed the country's growth and have faith in its partners.

Internet-based manipulation, camouflage, mental distortion, and incorrect information should also be avoided.

4.Select the kind of request

You must choose the kind of demand when buying shares in Nigeria, since you will see the ask price and the bid price at the moment of purchase.

The ask price is the price at which sellers are willing to sell their shares of stock. The bid price is the price at which prospective purchasers are willing to buy a share. This disparity is referred to as the "spread."

5.Start buying

After completing the preceding processes, you may begin buying shares in Nigeria via the Nigerian stock exchange or your brokerage firm, and you can even contact your financial adviser in the stock exchange.

6.Regularly enhance your stock portfolio

In order to prevent losing money on shares that are no longer fit for your objectives, it is not enough to just buy shares in Nigeria; you must also examine if the shares in your portfolio are still appropriate for you.

Before buying shares in Nigeria

Before beginning any investing endeavour, you must assess your financial resources, define your investment objectives, and be completely prepared to assume responsibilities.

You must recognise that the Nigerian stock market swings frequently owing to supply and demand, company performance, and global events, and bear responsibility accordingly.

You must have well-defined investing objectives. Is the objective amusement or profit and investment? You must also be eager to build a strategy for the progression of your investing process, including when to purchase and sell and when to maintain the status quo.

Best time to buy shares in Nigeria

Buying the dip, as a high-return technique, is the best moment to buy shares in Nigeria. This strategy is used by investors seeking to enhance their position in the stock market and generate long-term gains. 

Buying the drop is not tied to a specific time, but appears as a trading strategy in the event that the price of a company's share drops significantly and unexpectedly, as non-expert investors tend to sell their shares quickly to avoid further losses, while experienced investors buy as many of these shares as they can. 

At its lowest point, they anticipate that it will rise again in the future, yielding enormous rewards in the long term.

Benefits of buying shares in Nigeria

1.Value appreciation

In general, the long-term performance of shares is superior to that of cash or fixed-income products such as bonds.

However, the prices of stocks vary. As the influence of stock market swings tends to diminish with time, investors may choose to adopt a long-term perspective for their stock portfolio.

2.Protection

Inflation and taxes may damage your wealth. By investing in stocks, investors may take advantage of favourable long-term tax treatment, which can mitigate or minimise the unfavourable consequences of these two variables.

3.Maximise income

Some corporations pay dividends or special distributions to their shareholders so that they may generate consistent investment income and a greater return.

In addition, the favourable tax status of Nigerian stocks enables their owners to keep a larger share of their earnings. (Note that dividends paid by firms based outside of Nigeria are taxed differently.)

4.Capital expansion

A stock's price swings over time. When the price of a stock rises, shareholders might opt to sell it for a profit.

5.Dividend earnings

Numerous organisations provide dividends to their owners, which may be a tax-efficient source of revenue.

6.Freedom to vote

A shareholder's ability to vote entails a measure of influence over the selection of the board of directors and the management of the firm.

7.Liquidity

Typically, common stocks are traded more often than other types of investments, such as real estate, artwork, or jewellery. Therefore, investors may readily purchase or sell them for cash.

8.Favourable tax treatment

Income from dividends and capital gains are taxed at a lower rate than income from wages and bond interest.