How to Buy Shares in Nigeria Stock Market & Make Money Online – Learn How I Started Investing In Stocks, Pick & Trade Best Performing Penny & Dividend Shares In Nigeria Stock Exchange Market
You are welcome to my personal finance and stock market blog – a platform I created to share investing tips and how to build dividend income portfolio in the stock market.
Follow me keenly as I reveal my trading techniques and the stocks I started with. After reading this guide, you will have a clearer understanding of how the stock market works and if you had any fears about it, you would see the way forward from here. Come with me!
My name is Ogechi Ndukwe, a passionate Internet Entrepreneur, and Stock Market Investor. I started my stock market journey in 2003 when I persuaded my Dad to buy into the now-defunct Oceanic Bank shares when they offered millions of shares for public subscriptions at N5 each. Although I didn’t understand the metrics behind stock picks, from my basic knowledge of shares in Financial accounting, I knew it was a good place to invest idle cash and make money.
My dad was reluctant. I persuaded him to buy N10 000 worth of shares but he reduced it to N5000 and asked me to go subscribe at the nearest Oceanic bank in Ajao Estate, Lagos. For you to subscribe to public offers in a company at that time, you’d have to go to the nearest bank and fill a subscription form.
To cut the story short, Oceanic bank shares soared in 3 years to hit an all-time high of N32 (from N5), a level that drove our N5,000 investment to N32,000 representing more than 600% return. I sold the shares and diversified into other banking stocks and since then, I started probing the stock market, the recurring search I typed on Google was, what drives share prices higher? I knew that if I could find the right answers to that critical question, it would help me multiply my money Nigeria stock market.
The journey so far
In my quest to uncover the secret of buying shares that will rise in price, I downloaded books on stock market investing, bought hard copies of investment books. After reading through them, I discovered that these books had one thing in common, they stressed fundamentals and timing: you need to understand the company you are buying their shares in, know what drives their profits or how they make money and lastly, interpret investors sentiment; know when people are buying and when they are selling.
The last point was so important to me because, when you follow a share price, you will discover the daily and unpredictable fluctuations in price, that is the “today price is up, tomorrow price is down, next tomorrow price is down, the day after the price is up” situation. It is always unnerving for the First timer who does not know the factors that influence the prices.
The funniest part is if you had bought shares in a company you do not understand their fundamentals, you will literally have two minds; one saying ‘buy more’, another saying ‘sell now or else, you will lose your money’. When you eventually sell, you will witness the price jump to 2x the previous price. So annoying!
I experienced this in International Breweries stock. I bought shares in this company at N23 and waited for three weeks but nothing happened; there was no price increase instead the price dropped to N16.8 and out of fear of losing, I quickly unloaded all units to get my cash back. Exactly 2 weeks after I sold, the price jumped back to N23, then moved gradually to N38.9. When I checked, I was so pissed with myself and wished I had left it. In this guide, I will also talk about the greatest attitude you need to embrace like a pillow if you want to be a highly successful stock market trader.
Another share that got me in this Price trap was Okomu Oil, a local Palm oil producing and exporting company that first made me lose balance before doubling in price. I bought the stock at N15.75, and in less than 2 weeks I made 24.5%; a very modest gain. The big fall came when investors quickly sold their shares to take profit and it fell to N12.32. I couldn’t hold that loss, I sold the shares and right under my nose, Okomu Oil doubled to N32 in 3-4 months. You can imagine the profit I would have made if I knew what I now know perfectly that makes me buy shares at the right time. However, Okomu Oil is also part of my portfolio right now.
I can go on and on to share my failure in the stock market. The truth is I didn’t have a solid understanding of shares. I did guessworks, ended up buying shares of a good company but eventually sell off too soon, with no knowledge that the share is about to rise again. I was not patient enough to hold on to my investment for at least 6 months before deciding to let go. Patience is the greatest attitude you should have as a Stock Market Investor.
After reading several books on Stock Marketing Investing, How Successful Investors buy shares plus my years (of experience) following the market in good and bad times. I discovered the secret to multiplying my money in the stock market. This is a sure way of earning passive income.
As I write this report, I have invested in several companies after due diligence and analysis and if you thinking of getting started in the stock market, follow these steps:
- Consult a registered stockbroker; My recommended brokers are Meristem, MorganCapital or Stanbic IBTC broker. Personally, I have had a great experience with Meristem stockbroker; swift support and client services.
- Your preferred broker will ask you to submit the following documents: a valid ID (International Passport, National ID or Driver’s License), Utility Bill for address verification, and Passport Photograph
- Upon approval, a CSCS account will be processed and your unique clearinghouse number (CHN) will be sent to you.
- Fund your account and start trading shares.
- Invest in knowledge, buy books and click here to join our stock market group on WhatsApp.
- Exercise patient and avoid get rich stock market scheme.
Key Principles for Investing in the Nigerian Stock Market – How To Know The Best Nigerian Stocks To Buy Now
They include; Proper timing, Proper Financial Report Analysis, and Patience. These three secrets combined can make anyone, I mean anyone earns a consistent profit in the Stock Market.
See – My top stock market strategies and advise
Let’s read how each of them works.
Financial Report Analysis
This is the most important place to look at before you can decide on a stock – everything about stocks starts and ends in the way a company has performed during the year or on a quarterly basis. Always analyze the sales trend, cost drivers, profit potential, debt level and cash position of a company before buying shares in your selected company. Investors are only attracted to good business generating healthy cash flow and so should You.
When a company reports an impressive profit figure that surpasses the previous year’s record, investors are attracted to such company and as they buy more shares, price increase follows.
Some folks have asked me if one needs to be an Accounting graduate or Financial Analyst to interpret the financial statement. The answer is NO, you only need to employ common sense – Think like a business owner and you will pick the basic data you need and move on.
A great company is expected to grow their sales (operating income – income earned from their core business operation). A company that reports a good number of products outside of their core business is not recommended as such sales are not sustainable – always watch out for the sales number.
See – How to know which sector stocks to invest in right now
Many Companies release reports of their activities. The most important report to follow when investing in a company’s share is their quarterly report. It reveals a whole lot about the current’s year financial result; an indication that tells whether you should hold on to the stock or sell immediately to cut your loss.
Every company, even with good financials, has a specific period investors scramble to buy their shares. You need to know the perfect time to buy a company’s share and hold on it without factoring the daily fluctuation of price. There is a war between buyers and sellers, prices don’t go up in a straight line neither does it fall in the same manner. But, as an intelligent trader or investor, you should focus on value (which you can spot from the first principle) and not price because eventually, the future price of a stock will reflect the perceived value of the company. So learn to spot the perfect time to buy stock.
See – Dividend Income Stocks
Don’t make the mistake of buying stock when you are not sure of its time – You may end up buying when the price is about to fall sharply and hence wipe out a percentage of your portfolio value.
See – When is the best time to sell your shares?
The essence of timing is to apply what I call Price Level Analysis, a powerful technical skill that helps you analyze investors’ sentiments. With it, you will definitely know when a share is trending up, down or sideways. In this blog, I will be sharing a practical guide to pick profitable stocks at the right time.
See – How To Know Where Big Stock Investors Are Putting Their Money
We are still on the 3 key principles to making money in the Nigeria stock market. The third but not the least important principle here is patience. People lack patience when it comes to building a business or waiting for their investment return; the notion of quick money has taken over. A lot of people want to make fast cash – bring N10 000 and take N100 000 after 30 days. What a financial trap!
The easiest way to lose money is to put it in an investment with no solid revenue model – not understanding the principles behind the return but only focusing on the return.
When I talk about the stock market, usually the next thing I hear is ‘How much will I make after 30 days?’, as if I control prices. There is no investment without risk and as such proper education is the key. I don’t advice people to buy shares when they have zero knowledge of the market.
To exercise patience, you need to learn the basics of the stock market, understand the key drivers of shares price, and how to pick great stocks.
You also need to learn how to wait. The biggest reason I missed opportunities in my early years of trading stocks was lack of patience, I hardly waited for weeks to see the result of my investment. I just sold as soon as possible once it falls, after which price would spike.
But now, when I buy, I have a minimum holding period that I have mastered – this period is so vital that it allows the value of the stock eventually moves price to the north or south.
As an investor, you must be ready to exercise patience, allow your investment to grow in the midst of daily price fluctuations or else, fear will make you lose the profit potentials of your perfect trade.
But that doesn’t mean patience is the ultimate key, the two factors mentioned earlier must be in place and it is more profitable when you follow the sequence which is:
I hope you enjoyed my personal trading guide and have learned a lot about what it takes to be successful in the Nigeria stock market? If you have any question(s) or would like me to discuss your personal investment objectives, click here to join our stock market group on WhatsApp
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Surely, you are interested in gaining more fresh insights on how to buy shares in the Nigeria stock market. I have made some errors that caused me lots of money and I believe you don’t need to lose same to gain the right investing knowledge, here are some key advises and tips to buy shares in the stock market.