Now that you’re ready to start investing in stocks, let’s get into it.
Step #1: Start Investing as Early as Possible
Investing when you’re young is one of the best ways to see solid returns on your money. Thanks to compound earnings, which means the returns on your investment start earning their own return. Compounding allows your account balance to snowball over time.
Here’s how it works, in practice: Let’s say you invest ₦20,000 every month for 10 years and earn a 6% average annual return. At the end of the 10-year period, you’ll have ₦3,330,000. Out of that amount, ₦2,420,000 is money you’ve contributed (₦20,000 monthly contributions) and $910,000 is the interest you’ve earned on your investment. Now imagine accruing this over a longer period. That is the power of compounding!
STEP #2: Understand How the Market Works
A lot of investing mistakes stem from people not having proper knowledge of what they are putting their money into. If you want to make money in stocks, or any other investment, you must do your research first. Gather all the basic knowledge you can find about the market. Read online resources, watch educational videos, subscribe to newsletters, etc.
STEP #3: Decide How Much You Want to Invest
Before you start investing, you need to consider your income, expenses, and goals. Then, determine how much you can conveniently invest monthly and be disciplined about it. This, for most people, might mean cutting down expenses or generally changing their lifestyle to accommodate investing.
STEP #4 Select an Online Stockbroker
Using an online stockbroker is the most convenient way to purchase stocks. You can buy shares and stocks online through a Securities and Exchange Commission (SEC) licensed app. One of the most trusted online platforms to buy Nigerian shares is i-invest. You can download this app from your app store, create an online account like that of opening a bank account, and begin to invest. Another option is to use a full-service broker like Parthian Securities or to purchase shares directly from the exchange.
STEP #5: Select the Stocks You Want to Buy
After you’ve established and funded an account, you’re ready to start picking stocks. When conducting your research, don’t let the flood of information and live market fluctuations overwhelm you. Make your objective clear. The goal is to find businesses you know and use their product or services, in which you would like to have a stake. I remember Uncle Jimmy had always insisted that we buy stocks of companies that we believe will be there for the long haul. So, when I started off, I picked Nestle, Airtel, and Guinness as my first set of stocks.
STEP #6: Decide How Many Shares You Want to Buy
You should not feel compelled to purchase a specific number of shares at once. Begin by purchasing one stock to gain experience and to see if you are prepared to weather difficult times with minimal sleep loss. This can help you test your risk tolerance level. When you’ve mastered the art, you can increase your stake.
STEP 7: Don’t Stop Learning
Taking the time to look over the financial history of the companies you are thinking of investing in, will give you a better sense of the future. While no one can say with certainty that a stock will go up in value, taking the time to evaluate the past few years of the company’s growth can give some insight into the possibility and help you stay ahead when opportunities arise.
At Parthian Securities, we encourage everyone to take ownership of their financial life by asking questions and getting information that matters.
Our research and insights bring you information that fosters smart decision-making because we believe that the best outcomes in life come from being fully informed.
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