Investing in the Nigerian Stock exchange could be very risky if you are not knowledgeable about the stock exchange market. Stock exchange is a platform where traders and stockbrokers buy and sell shares, bonds, and other securities. If you bought a share in a company, a while back, and you’re no longer interested in being part of the company, you can sell your shares through the stock exchange and liquidate your investment. The stock market or secondary market is where shares that were previously owned are re-sold.
To invest and gain profits from the stock exchange, you need to understand the Nigerian stock exchange, how to invest in the NSE, and know the conditions involved in stock exchange investments.
What is the Nigeria Stock Exchange (NSE)
The Nigerian Stock Exchange (NSE) is a stock market that brings the African entrepreneurs and investors together. You can invest in NSE as a primary market (buying securities), or as a secondary market (re-selling securities). At the NSE platform, you can easily see when securities for certain companies are available and when you should sell your security (based on the company’s growth ). Initially, foreign trading was not allowed, but since 1993, foreign traders have been allowed to trade on the NSE platform. You can buy and sell shares of only publicly quoted companies from the Nigerian Stock Exchange.
The trading system of the NSE enables dealers to trade live, through the network connected to its central terminal. The stock prices are usually published by the NSE on the Nigerian Stock Exchange Price List. The price list shows the companies doing well in the stock market as well as the losers.
How to Invest in Nigeria Stock Exchange
Before you start investing in the Nigeria Stock exchange, you need to open a brokerage account, you can open one from any of the approved stock broking firms in Nigeria. In opening a brokerage account, you’ll need a valid means of identification, bank account details including BVN, passport photographs, signatures of account holders, next of kin details, and other details. If you have a bank account, it’ll take less than 48 hours to open your brokerage account. There are online platforms for some stockbroking firms, so you can open your brokerage account through their online platforms if you don’t want to go physically to the firm.
The next thing you need to do is to open a Central Securities Clearing System (CSCS) account. A CSCS account is a necessity to avoid fraudulent activities. It has the function of depository clearing, settlement, and delivery to ensure the safe conduct of your share transaction on the NSE. The CSCS account cost between ₦2,000 to ₦5,000 per annum.
The next step would be to fund your stock brokerage account and finally make your trade. You can fund your account through your stockbroker and inform them of the shares to purchase on your behalf. Communication you and your stockbroker is usually either through your registered email. It is important to do a little research and analyze the NSE price list to know the best stocks to buy before investing.
Conditions in the Nigerian Stock Exchange
Although investing in Nigeria Stock Exchange seems to be simple and hassle-free, some certain conditions and terms occur during every investment. The transaction fees, funds clearance process, and withdrawal method, should be considered.
Each time a bid is made or an offer goes through, you’ll be charged a transaction fee amount. The transaction fees are statutory fees you have to pay to your stockbroker. It could vary from 1.5% to 1.8% per transaction.
Clearing of funds
After a share or stock is bought, it takes up to 4 days for the entire transaction to conclude. In the Nigeria stock exchange clearing and settlement of funds is T+3.
After your sell securities, the money would remain in your stock brokers account till you request for a withdrawal. Upon request, it would take 24 hours your money to move from your stock brokers account to your bank account.
Investing in the Nigerian stock exchange is very risky. It could deliver high ROI at a particular time, and you could lose all our funds at another time. Proper research and analysis is very important in investing in stock exchange in Nigeria. If stock exchange seems too risky or too complicated for you, there are other investment platforms with zero, risk, and high-interest rates. Sycamore is an investment platform that gives investors great returns through a peer-to-peer lending platform. By investing in Sycamore, you’ll enjoy high ROI, convenience, simplicity, and transparency. Visit www.sycamore.ng to learn more.