Buying shares in Nigerian capital market

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Posted by on Monday April 2, 2012 13:33:45:

Already made a couple of posts on trading shares in Nigeria and making profit from it. In this post, I would like to focus on how to make profit by buying shares.

What does it mean to buy shares? It simply means to look for a good priced stock that has future value and invest your money in it. It is like buying a parcel of land when you know that it is going to appreciate in a couple of years. For instance buying a parcel of land in Lagos which is expected to be a mega city in the near future is really a good investment. Same also is buying shares in a company that has a viable future.

Why do people buy shares? Simple for future capital appreciation. Although there are some people that buy shares because it pays dividends yearly for both the interim and final stages, you should look at the real picture - There is more money is buying shares for capital gains rather than dividends

Capital gains vs dividends
Dividends are normally paid to shareholders of a company after a profitable year and the company decides to distribute cash in form of dividends. However, the true value of your share should not just be in the dividend you were paid but on the real market value of their shares.

How some investors profit from shares while still maintaining their initial investment
Assuming you invested N100,000 in the shares of a company like Union bank in 1990 at N10 and in 2005 the price appreciates to N20, you would have gained N10 per share and since you were able to buy 10,000 shares with your capital, you total investment will now be worth N200,000 so there is an extra N100,000 capital gain. How some people profit from their initial investment while still maintaining their base capital is by simply cashing the extra N100,000 by selling it for cash.
So you are allowed to sell any extra gain above the capital itself. Infact you can sell your whole number of shares anytime you want but it is better to just sell the extra capital gain on your invesment and still maintaining the initial investment. So for some people, they just buy and hold and when the value exceeds their initial invesment, they sell while paying only about %4 as selling fees to their stockbrokers. So it is not really the dividends that make the money but rather the capital gain you get from it when your shares appreciate.


Best times for buying shares in Nigeria
Well the best time for buying shares in a year are normally after the company closes it's financial year and a lot of investors may be selling. It could be just before December or other times when the market is not at it's peak. The market normally gets to it's peak something in the middle of the year such as March, April and May. A good time may also be when prices have fallen rock bottom such as now as a lot of shares are already trading close to their minimum value of N0.50. So if you see a company share that is listed on the NSE that is close to N0.50 and the company still has future prospects, it is mostly a good buying opportunity. When buying shares, the normal thing is to buy low and sell when it's high. Actually now there are a lot of opportunities for buyers in the market and there is little or no liquidity. Most people no longer want to buy since the market almost crashed but this is actually the best time to buy because Nigeria's economy is growing stronger.

Which company shares can one buy?
You can buy from any company that doesn't have too much long term problems such as debts, bad reputation or dwindling public trust. Shares of banks like Zenith, UBA, Access, Fidelity are actually a good buy. Unity bank may also be a good buying investment due to it's low price. You should also look into other sectors of the market like telecommunication, manufacturing and constructions which includes Cadbury, Dangote Sugar and so on.

Spread your invesments
When investing as a buyer, you should try spreading your capital across various companies and not just in once since there is no guarantee that it will be profitable. So assuming you have N100,000 to invest, you may split the capital into 5 places and buy shares of maybe 5 companies rather than putting all your money into one. As time goes on, you would be able to know which ones are more profitable to you than the others.

2 ways people make money from stock invesments
- Capital gains
- Dividends




Comments:
Re: Buying shares in Nigerian capital market Reply by emmanuel on Friday April 6, 2012 at 18:40:44:

felix tank u for ur posting..bur pls i need more information abt shares and hw it is sold frm issuing houses..God bless u.


Re: Buying shares in Nigerian capital market Reply by Felix Okoli on Friday April 6, 2012 at 18:40:44:

If you want to buy shares today and quickly, just go to any registered stockbroker and fill the application form, pay the funds and it should be bought for you within a week. Most shares are now being sold on the secondary market and that is through the stockbrokers.


Re: Buying shares in Nigerian capital market Reply by ephraim on Friday April 13, 2012 at 24:1:14:

pls, where do u suggest one get a good stockbroker in the Nigeria stock exchange. I'm kind of novice on the system, please try and put in a simple sense. Thanx and God bless u.



Re: Buying shares in Nigerian capital market Reply by Felix Okoli on Friday April 13, 2012 at 24:1:14:

Go to this website to see a lit of registered stockbrokers in Nigeria:

- http://www.nse.com.ng/Regulation/ForBrokers/Pages/Dealing-Members.aspx


Re: Buying shares in Nigerian capital market Reply by Mr Uyi on Saturday April 21, 2012 at 24:3:40:

I love your write up.
You are a true concern person,God bless you for that.
I have lost many hundred of thousand in shares and i am very scared in investing more. I still have shares in oando plc it is nit doing well, i am planning to sell at a big lost.
I am confuse,what should i do. please give shares that you feel is the best to buy that have good future,Thanks



Re: Buying shares in Nigerian capital market Reply by Felix Okoli on Saturday April 21, 2012 at 24:3:40:

@Uyi, I wouldn't advise selling your Oando shares now. If you can find more money, buy more shares now that they are cheap. Buy cheap shares below N1. I believe the market will pick up again soon as Nigeria's economy gets stronger


Re: Buying shares in Nigerian capital market Reply by Mr Uyi on Monday April 23, 2012 at 21:35:51:

This the best site i have ever since that is very educative and informative.

Thank you very much for replying my recent message.

I wont sell the oando shares, i we try and buy shares @ 1.1 to minimize cost,according to your advise.
Please can you list 5 shares with that share price that have propect so that i can choose from.
I praying to hear your speedy reply.
Thanks.



Re: Buying shares in Nigerian capital market Reply by Felix Okoli on Monday April 23, 2012 at 21:35:51:

Here are some shares I would recommend to be on the safe side:

Diamond bank: 2.52
Fidelity bank 1.50
May and baker 2.09
Sterling bank 1.20
Neimeth 0.70
Guaranty Trust Assurance 1.6
UBA 2.81

You should select like 5 companies and spread your investment, So if you have like N500,000, you can invest N100,000 each. I doubt you will lose.


Re: Buying shares in Nigerian capital market Reply by Riliwan on Tuesday May 8, 2012 at 23:51:21:

U re so gr8 felix..pple like u wil surely intensify the level of education in nigeria..
Pls felix,can u hlp me list companies that hav affordable share prices and their amount?


Re: Buying shares in Nigerian capital market Reply by Felix Okoli on Tuesday May 8, 2012 at 23:51:21:

You can check out stock prices here: http://www.cscsnigerialtd.com/web/guest/265


Re: Buying shares in Nigerian capital market Reply by sam on Tuesday May 15, 2012 at 19:20:20:

wats d minimum amount one can have to purchase a share?
can a student like me purchase ?


Re: Buying shares in Nigerian capital market Reply by Felix Okoli on Tuesday May 15, 2012 at 19:20:20:

Even with N10,000, you can start buying shares. Anyone can buy as long as he has attained the legal age of 18. If you are a student under 18, I guess only your guardian can buy on your behalf


Re: Buying shares in Nigerian capital market Reply by Waheed on Wednesday May 23, 2012 at 8:39:36:

Plz can u gv ur contact number.


Re: Buying shares in Nigerian capital market Reply by olabisi on Friday June 1, 2012 at 9:13:43:

pls, i'll need more information on how to invest in telecommunications and the oil and gas sector profitably as a student.could you pls reply to my email address



Re: Buying shares in Nigerian capital market Reply by Felix Okoli on Friday June 1, 2012 at 9:13:43:

If you want to invest in any of the said companies, you should first of all identify the specific companies you want to invest in, visit a stockbroker, make the application and make payment. After that, the shares would be bought for you in a few days.


Re: Buying shares in Nigerian capital market Reply by Ifiok Essien on Wednesday June 20, 2012 at 11:23:44:

Pls Mr. Felix,im in Portharcourt..whr cn i locate d stockbroker here,and is ds tym ryt 2 buy shares?



Re: Buying shares in Nigerian capital market Reply by Grace on Thursday July 12, 2012 at 14:17:28:

Good day all,an interesting site i must say with very educative and informative people, but it is very important if we all understand the need to verify the shares we already have,as much as the downturn in the economy affected the capital market it is important we secure the ones we already have, this is also important cos it keeps the stocks as liquid as possible , so when ever there is a tendency for a downturn it would be easy to sell them or convert them to another blue chip stock.
This can only be achieved if your stocks are verified through a brokerage house.

so my dears, if you are in need of a brokerage house, of reputable track record with an intention to deliever utmost satisfaction and add value to you, do me the honors and contact me, a text message or call or a mail would do and i would follow up adequately.
Grace
okey_grace@yahoo.com
07037859138



Re: Buying shares in Nigerian capital market Reply by gbenu sunday on Wednesday July 18, 2012 at 17:8:56:

i discover your colum today for the first time it is more educative god bless u



Re: Buying shares in Nigerian capital market Reply by peace on Thursday August 2, 2012 at 15:49:0:

Felix tnx for this. I have at least #40,000 and i want to invest it as a student. i actually want to buy shares frm any bank, any oil company and any telecommunication company. how do i go abt dis? wich companies shud i consider n hw can i divide d money??? pls give me d steps cos am in abj. waitng for ur reply.tnx/



Re: Buying shares in Nigerian capital market Reply by Felix Okoli on Thursday August 2, 2012 at 15:49:0:

You can buy shares of a bank like Sterling bank or Fidelity. You could buy as much as 20,000 units since they cost about 1.50 per unit.
Just go to any securities firm, fill a form, pay into their account and get your report within a week. You would pay about 2 to 4% as commission. After purchase, you can always get your stock statement printed at the cscs office.


Re: Buying shares in Nigerian capital market Reply by samuel on Friday August 31, 2012 at 16:37:32:

as a student with just 20000 #,which company can i invest in for capital gains and dividends




Comments:
Re: Buying shares in Nigerian capital market Reply by williams on Wednesday July 30, 2014 at 23:51:23:

please i would like to have your write up on how to sell and buy shares. i just came upon this site nice work may God increase your knowledge base.





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