You’ve heard of the stock exchange and probably concluded that its for big men and politicians. But you would be wrong. As a matter of fact, anybody can invest in the Nigerian Stock Exchange (NSE), as long as it is a publicly listed company on the NSE. In other words, you don’t need to be a ‘big man’ to invest in the NSE and make some money.
This week and next week, we will be giving all the inside gist, tips and tricks on how to invest in the NSE. If you’ve never invested in the stock exchange, interested in investing in the NSE or you wish to gain some insight into how it works and what to expect then this article is for you. Pay attention.
- Getting started: The first thing you’ll need to do before you can start trading stocks is to open a brokerage account with any of the approved stock broking firms in Nigeria. You’ll need: a means of identification, bank account details including BVN, passport photographs, signatures of account holders, next of kin details (if it is a personal account) and so on. Some firms also have online services so you may not even need to go there physically.
- What else?: Well, experts recommend you open a Central Securities Clearing System (CSCS) account. This is the system that warehouses all the accounts created and maintained by all stockbrokers in Nigeria and allows you to see your portfolio (stocks you own) personally. This protects from a fraudulent stockbroker, for example and it’s very cheap too costing roughly N2,000 – N5,000 per year.
- Trading equities on the NSE: To start trading, you should have first completed step one. You will be given a Clearing House Number (CHN) which is exclusive to your portfolio. To start trading, just deposit money with your stockbroker and instruct them to buy stocks on your behalf. You’ll get emails of everything that is going on with your money and whatever shares your stockbroker might have bought or sold on your behalf. For brokerages that have online platforms, you can also buy (and sell) stocks directly from their platforms.
- It’s not free: You’ll have to pay transaction fees anytime your bid or offer for a stock goes through. These are standard fees that will be paid to regulators and your stockbroker and they are very small amounts. Broker fees are usually between 1.5 – 1.8% per transaction.
- Taxes and clearing of funds: Fun fact – there are no capital gains taxes on buying and selling of equities (aka investing in the NSE) in Nigeria. Also, when you buy or sell stocks, it usually takes four days before the entire transaction is concluded.
That’s all for now because we don’t want to bore you and have you forgetting important details of this guide. Next week, we’ll give you gist on withdrawal of funds, trading times, market segments and lots more. You don’t want to miss it.
As always, when you win, we win. To the moon!