How To Invest In The Nigerian Stock Market and Earn Dividends (Beginner's Guide)



Hello, Welcome to this Introduction on Investing in stocks, This article will be focused on our Local Stocks (Nigerian stock market), We have another article that Focuses on Foreign Stocks Here. After this Tutorial you can buy pretty much every stock in the Nigerian Stock Exchange (NSE).

Investing is a way to set aside money while you are busy with life and have that money work for you so that you can fully reap the rewards of your labour in the future. Investing is a means to a happier ending.
Legendary investor Warren Buffett defines investing as "…the process of laying out money now to receive more money in the future."
The goal of investing is to put your money to work in one or more types of investment vehicles in the hopes of growing your money over time.
Let's say that you have N100,000 set aside, and you're ready to enter the world of investing. Or maybe you only have N5,000 extra a week, and you'd like to get into investing. In this article, we'll walk you through getting started as an investor in the Stock Market and show you how to maximise your returns while minimising your costs.

And Note: With advances in Technology you can now Start Investing with as little as N1,000

But Firstly, Lets Answer these;

  • What are Stocks and Stock Market?
  • What's the NSE?

STOCKS SIMPLIFIED

A stock (also known as equity) is a security that represents the ownership of a fraction of a corporation. This entitles the owner of the stock to a proportion of the corporation's assets and profits equal to how much stock they own.
Units of stock are called "shares."

Having stocks or shares simply means ownership to a fraction of a company... For Example if a company has 1 Billion shares available and Traded publicly, It mean an Investors Holding 1 Million shares has 0.1% of that Company.

This Puts Investors in a Position where they benefit from the companies Quarterly or Annual profits in form of Dividends.
Don't forget, you're a Co-owner

WHAT ARE DIVIDENDS?

A dividend is a distribution of profits by a corporation to its shareholders. When a corporation earns a profit or surplus, it is able to pay a proportion of the profit as a dividend to shareholders.

Dividends are paid Quarterly, Biannually or Annually depending on Companies structure and terms.

Example;

Let's say Shares at Company A is sold at N20 per share and you as an investors Holds 1 Million shares, This means you've invested around 20 Million Naira+ to Company A.

If Company Announces a Dividend of N3 per share for the year, It means you've just made 3 Million Naira which is 15% in Dividends that year.

This happens continually and Earnings vary from year to year.

Note: Not all stocks pay Dividends

Fact;
Jeff Bezos Earns Less than $1.6M Annually as Salary from his company Amazon but he is the World's Richest man.
He holds over 55 Million Amazon Stocks, With 1 Amazon stock at $2,300+ that's gives Him his net worth of Over $130B.
Imagine amazon paying $100 dividend per stock for the year 😱
That's less than 4.5% annually But Jeff Bezos will get 55M * $100 = $5.5B+ In Dividends that year, (How useful is the salary?)
But Amazon doesn't pay Dividends currently, So Jeff is Just packing Money 😂
Read Also: How To Get Free Stocks From Top Companies

Stocks are bought and sold predominantly on stock exchanges, though there can be private sales as well, and are the foundation of many individual investors' portfolios. These transactions have to conform to government regulations which are meant to protect investors from fraudulent practices. 

Historically, Investments in Stocks have outperformed most other investments over the long run. These investments can be purchased from most online stock brokers.


STOCK MARKET

A stock market, equity market or share market is the aggregation of buyers and sellers (a loose network of economic transactions, not a physical facility or discrete entity) of stocks (also called shares), which represent ownership claims on businesses; these may include securities listed on a public stock exchange, as well as stock that is only traded privately, such as shares of private companies which are sold to investors through equity crowdfunding platforms.

THE NIGERIAN STOCK EXCHANGE

A Stock Exchange is simply a market in which securities are bought and sold.

The Nigerian Stock Exchange was founded in 1960 as the Lagos Stock Exchange, on September 15, 1960, the stock exchange council was inaugurated. Operations began officially on August 25, 1961 with 19 securities listed for trading. Operations were initially conducted inside the Central Bank building with the exchange having four firms as market dealers: Inlaks, John Holt, C.T. Bowring and ICON (Investment Company of Nigeria). In December 1977 it became known as The Nigerian Stock Exchange (NSE), with branches established in some of the major commercial cities of the country.

Note: Only Recognized and Regulated brokers can trade stocks.

That's why most of our Parents couldn't invest or own Stocks, so Even after Knowing all this one may not know how to get stocks.

There are Several Known Stock brokers in Nigeria and Technology has helped brought them out for the common man like you and I.

WHY BUY STOCKS?

A lot of people come to Me and say “Boss why buy Stocks? you don't get fixed returns (Dividends), you need good capital, It's risky” and more

Here's Why Everyone needs Stocks, Everyone;

Let Me Give You This Again;
Historically, Investments in Stocks have outperformed most other investments over the long run
According to Forbes, over 18% of the wealthiest people in the world amassed their wealth by investing in the stock market.

Owning Stocks isn't gambling, Isn't a get rich quick scheme and isn't a Joke either... You own a stake to An entire company, You're not in a “Try your luck” or “By chance” Opportunity.
It takes time but doesn't take as much as you'd be thinking;

Let's say you Bought 1 Million of Company A stocks For N20 per share, That's 20M Naira;
You Earn on average let's say 10% Annually as Dividends for the next 10 years, That's 100% (20M in Dividends)
Wait, that's If the company doesn't grow or stagnates;
Because stock prices increase if the company performs well, so Imagine these stocks @ N50 per share in 10 years time, You'd be worth N50 Million, at 10% Annually it means you're earning around N5 Million yearly now plus you can sell off anytime.

With the right stocks in your portfolio, it'll outperform almost all fixed earning opportunities, Dividends + Share Price increase means massive profits.
You can even earn up to 1000% percent or 10X in this 10 years period. (Major Investors surpass this).

What some of the Investment Gurus have achieved

Some stocks at the NSE started @ N0.5 per share and today they're well over N5 per share. If only our parents bought these or Invested even N100,000 for us... We would be N1 Million rich now + Dividends for all these years, Think about it.

Nestle Nigeria started at around N200 per share, as at 2019 Nestle was trading at over N1,400 per share, as a write this, Nestle trades at around N830 at the NSE


SO LET'S BUY YOUR FIRST STOCK ALREADY, SHALL WE?

I'm keeping this at a base level where anyone can understand it, so let's talk about getting you started.
Here's where things in the past got complicated, You'd hear "locate a stock broker" "have a minimum of N500,000" and plenty Jargon, But Not anymore.

Several Tech start-ups has covered this gap and brought to stock brokers to the common men, Amongst these start-ups I'll list just two, give a brief description and end this long ride.

If you Want a Full List of Platforms you can Trade Nigerian and Foreign Stocks then Click Here

1. CHAKA NG


Chaka.ng is a property of Chaka Technologies Limited, a company duly registered with the Corporate Affairs Commission, Nigeria.

To ensure regulatory compliance, proper market behaviour and security of investors, all brokerage investments are facilitated by Citi investment Capital Limited, a licensed Nigerian stockbroking firm registered with the Security and Exchange Commission (SEC).

So, for those asking if “Chaka Stocks is legit”, You can see the Company behind Chaka Stocks, Citi Investment capital ltd.

I checked them up on NSE and they're listed as Official members, So it's 100% Legit.

Chaka let's you invest in and Trade both Local and Foreign Stocks.
We started Chaka to remove global investment barriers between Africa and the rest of the world making it easier to access opportunities at home and abroad We believe that Africans should have ample opportunities to travel, trade and invest around the world. We also believe it should be easier for the world to trade and invest in Africa. 
We’ve got a talented and passionate team of engineers, stockbrokers & financial professionals working to make this a reality.

A really simple and Exciting Platform.

With chaka you can start buying Stocks with just N1,000 in your portfolio. Yes, 1000 Naira, you don't need Millions... Sign up below to get started.


2. WEALTH NG


Wealth.ng is a product of WealthTech Limited (RC 1547536), an affiliate of Sankore Securities Limited. Investment management and advisory services on Wealth.ng are provided by Sankore Securities Limited, which is registered with the Nigerian Stock Exchange and regulated by the Securities and Exchange Commission, Nigeria.

So Wealth cash or Wealth ng is 100%, I checked up Sankore Securities Limited and they're listed on the NSE as official members.

Wealth Operates with a Fascinating Philosophy, Which is;
Everyone deserves a shot at success, regardless of their background or current social status. But not many understand how to build sustainable wealth.
People know how to work for money but do not know how to make their money work for them. This is the very reason Wealth.ng was created; to help bridge that knowledge gap and put real Wealth in the hands of as many people as possible.

Using FinTech as a bridge;
Advancements in financial technology have made it possible for us to offer investment opportunities to more people. If you can use a smartphone or a web browser, you can invest on Wealth.ng. Traditionally complex processes have been simplified, overwhelming paperwork are now short and simple forms, and the need for an intermediary is history. You can sign up right now and make your first investment in less than five minutes.

With WEALTH NG, N1,000 is enough to get you into the investment world as they offer several opportunities all in one place (Agriculture, Real estate, Stocks and Savings).
Wealth Ng has very few Stocks listed
This is because their team picks the Stocks they feel has the potential to grow thereby reducing the risk factor for Average investors.


CHAKA VS WEALTH NG

I get several questions on which platform I use and which I recommend, Well Sincerely I'd recommend Chaka Stocks for serious persons who wants a robust and diversified portfolio.

However WEALTH NG is good for starters and people who would love to go into other sectors like real estate, agriculture and others.

I recommend you join both and get started with both platforms... I personally use Chaka stocks more even though I started with Wealth ng.
Chaka Stocks is just so simple, robust and diversified.

CONCLUSION

As far as investing is concerned owning Stocks is still 100% Recommended, I've given you all the necessary basics, how to get started I'm Nigeria and what to expect.

Note that you pay small fees when doing purchases, This means nothing if you're focusing on the long run.

So this brings us to the end of this article, thanks for reading through, hope you enjoyed it? Any questions or additions please comment(s) down below.

I am also not a Financial advisor, Just a guy that knows what works... You can contact me personally to know the Stocks I'm buying.
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