The Nigerian Stocks Exchange (NSE) is reckoned to be the most viable in West Africa and the informed investors are constantly reaping the benefits obtainable from the NSE.
As much as prospective investors in Nigeria would want to tap into the benefits inherent in the Nigerian Stocks Exchange, they do not know where or how to begin. The average Nigerian citizen is only familiar with Initial Public Offers (IPOs) and Public Offers (POs). This is good but the journey should not just end there. Anyone serious about making good money from the capital market cannot do without the secondary capital market.
For the investor who wants to start investing in stock, the Nigerian Stocks Exchange offers two windows of opportunities.
- The primary capital market and
- The secondary capital market
The primary capital market is concerned with the sales of new issues. It is a window that is open to everyone without the need of a broker platform. Right Issues, Initial Public Offers, and Public Offers fall into this category. These offers are not always available and the public should make use of the opportunity when the offer is open.
On the other hand, the secondary market is characterized with the transacting of old issues. Most big players in the stock world are serious with the secondary capital market as the returns on investment could be mouth-watering.
Don’t get me wrong!
The primary capital market is a good investment window and inculcates the accumulative strategy of investment predominantly in its application whereas the secondary market is for speculative investment. Whether you intend going in through the primary or secondary capital market or both, there is still money to be made.
The Secondary capital market
For those who really want to create time to invest in stock as a means of livelihood, the secondary capital market is the place and that is what I will be dwelling on. I will leave the primary capital market for later articles.
So, how does one begin investment in the secondary market? First thing you do is lay your hands on a registered and reliable stock broking firm, and open an In-House or Stock Trading account. This stock broking firm will assist you with the buying and selling of shares daily on the floor of the Nigerian Stocks Exchange.
Note that a CSCS account is mandatory if you must operate in the secondary market. The stock broking firm you choose as your broker will forward your personal data to the CSCS for necessary account generation. This may take some days after which the investor can start placing buy and sell orders with his broker.
To place an order for stocks, the investor would be required by his stock broker to fill a mandate form and append his signature on it.
At this junction, it becomes pertinent to point out that the acceptable minimum deposit required to open a stock account by the investors varies with the stock broking firm concerned. So also is the commission that they charge for their services.
Some big stock broking firms require that you open a stock account with them with over one million naira. Understand that the 1 million naira is still yours. It will be used to buy shares for you when you do start trading after all documentations have been carried out including the opening of the CSCS.
Relax! Even if you don’t have a million naira you can still start your investment career. There are smaller firms that could open an account for you with between N50, 000 –N100, 000 once you have fulfilled their requirements.
Also bear in mind that you can open an account with a stock broking firm using your share certificates if the worth of the share certificates equates or exceeds that of the required amount for account opening.
Finally, you have to develop a sort of personal relationship with your stock broker – the person(s) assigned to your portfolio. Make him / her your friend so that he will have your best interest at heart.
As you can see, there is no hard and fast rule as regard investing in stocks and if you are really serious about financial freedom, you must consider stocks investment.
Come to think of it, the wealthiest men on the planet are into stocks investment. Warren Buffet is into stocks, Bill Gates is into stocks, Carlos Helu Slim is into stocks and even Aliku Dangote is into stocks.
This should tell you that there is money in stocks investment, though a lot of Nigerians are totally ignorant about stocks investment and the Nigerian Stocks Exchange in general.
Someone once said, though I can’t fix a name to it now, that, “If you are not investing in stocks it would be better for your two hands and legs be tied and you cast into a dungeon.”
So dear, what are you waiting for? Get on the ride!