Investing in shares is no longer out of reach for ordinary Nigerians. With as little as N5,000, anyone can start building wealth through dividends and capital gains. Success, however, depends on understanding company fundamentals, setting clear goals, and consistently monitoring investments, TEMITOPE AINA writes
For many Nigerians, the idea of investing in the stock market sounds complicated, something reserved for bankers, lawyers, or people with “plenty money”. Yet, the truth is that anyone with as little as N5,000 can start buying shares today.
Take Chika, a young graduate in Lagos who recently got her first job. Like many first-time earners, she wondered whether saving her salary in a bank account was enough. “I realised that my money was just sitting there,” she said. “So, I started learning about shares. At first, it was confusing, but with some guidance, I discovered it wasn’t as scary as I thought.”
Chika’s story is not unique. More young Nigerians are asking the same questions: What shares should I buy? Where do I begin? How do I know I am not making a mistake? Experts say the key is to start small, start smart, and start early.
Understand what shares really mean
Shares represent a slice of ownership in a company. When you buy a share in a company like Dangote Cement, GTCO, or MTN Nigeria, you are essentially becoming a part-owner of that business. This ownership comes with both opportunities and responsibilities.
Owning shares allows you to participate in the company’s growth. If the company makes profits and decides to distribute a portion to shareholders, you receive dividends, essentially a reward for your investment. For example, companies that consistently grow their earnings often provide regular dividends, creating a steady stream of income for investors.
Additionally, shares have market value. If the company’s performance improves, more investors may want to buy its shares, driving up the price. You can then sell your shares at a higher price than you paid, making a capital gain. This is one of the main ways investors grow wealth through the stock market.
However, investing in shares is not without risk. Share prices can go down if the company underperforms, faces economic challenges, or if market sentiment turns negative. Unlike a fixed deposit, your returns are not guaranteed, and you may even lose part of your investment if the company struggles.
Experts advise seeing shareholding as a long-term commitment. Patience and proper research often pay off more than chasing quick profits. Understanding the fundamentals of the company, tracking its financial performance, and monitoring industry trends can help you make informed decisions and reduce investment risks.
In essence, buying shares is more than a financial transaction; it’s a way to participate in the growth story of a company and, by extension, the Nigerian economy.
Open CSCS account
If you want to start buying shares in Nigeria, the first step is opening a Central Securities Clearing System account. Think of the CSCS account as the digital “wallet” where all your shares are stored. Without it, you cannot own or trade shares on the Nigerian Exchange.
You cannot open this account directly; it has to be done through a licensed stockbroker. The good news is that the process is now much easier than it used to be. Many brokers in Nigeria operate digitally, allowing you to complete the registration process online, submit your required documents, and have your account opened without visiting their office. Once your CSCS account is active, you’ll get a unique account number, just like a bank account number, which you’ll use whenever you buy or sell shares.
Set clear financial goals
Before buying shares, it is important to set clear financial goals. Determine why you are investing and what you hope to achieve. Are you saving for retirement, building an emergency fund, or planning a major purchase such as a home or education? Having defined objectives helps you select the right mix of stocks and decide how long to hold them. Clear goals provide direction and discipline, preventing impulsive decisions that could jeopardise your investment strategy.
Do your research before you buy
A common trap for first-time investors is the temptation to buy “popular” stocks simply because they’re trending in the news or on social media. While it can be exciting to own shares in big names like MTN Nigeria, Dangote Cement, or GTCO, experts advise that the most important step is doing your homework.
Look beyond the hype and focus on the fundamentals. How well is the company performing financially? Does it have a strong track record of paying dividends? Is its industry growing, or is it struggling under economic pressures? These are the kinds of questions you should be asking before committing your money.
Reliable sources of information include company annual reports, quarterly financial statements, updates from the Nigerian Exchange, and reputable business newspapers. You don’t need to be a financial analyst to understand the basics; focus on companies that consistently report profits, demonstrate growth, and operate in industries with long-term potential.
Understand taxation and fees
Understanding taxation and associated fees is another crucial aspect of investing. Be aware of capital gains tax, dividend withholding tax, and brokerage charges, as these costs can affect the overall return on your investments. Knowing how taxes and fees impact your profits allows you to plan more effectively and avoid unpleasant surprises, making your investment journey more predictable and manageable.
Avoid emotional investing
Finally, it is vital to avoid emotional investing. Decisions driven by fear, hype, or sudden market swings can lead to costly mistakes. For instance, a sharp market drop might tempt you to sell shares impulsively, while a trending stock might lure you into buying without proper research. Maintaining discipline, sticking to your research, and following a long-term investment plan will improve your chances of success and help you build sustainable wealth over time.
Diversify your portfolio
The old saying “don’t put all your eggs in one basket” is especially true when it comes to investing in shares. Even the strongest companies can face unexpected challenges, whether due to government policy changes, currency fluctuations, or global economic shocks.
Instead of concentrating all your money in one company or one sector, spread your investments across different industries. For instance, you might buy shares in a bank, a telecoms company, a manufacturing firm, and an agricultural business. This way, if one sector underperforms, your losses can be cushioned by gains in another.
Diversification doesn’t just reduce risk, it also increases your chances of benefiting from growth across multiple areas of the Nigerian economy. For beginners, experts often recommend starting with a mix of well-established companies (often called “blue-chip stocks”) and a few mid-sized firms with strong growth potential.
Invest with a long-term mindset
The Nigerian stock market, like every other global market, is never without its swings. One day, shares may tumble; the next, they could climb back higher. That’s why seasoned investors stress the importance of patience. The real winners, they say, are those who think long term.
“It is not a quick-money scheme,” a Lagos-based stockbroker told The Punch. “Investing in shares is about discipline and building wealth steadily over time. The market rewards consistency, not panic.”
For new investors, this means resisting the temptation to sell in fear when prices fall or chase every stock that suddenly spikes. The principle is simple: wealth creation through the stock market is a marathon, not a sprint.
Use professional guidance
While many Nigerians are eager to take control of their financial future, navigating the stock market can be confusing, especially for beginners. That is where licensed stockbrokers and financial advisers come in.
Today, most brokers offer beginner-friendly digital platforms, including mobile apps, where investors can track performance, understand terms, and even receive simplified market updates. Some provide daily or weekly tips on what to buy or avoid, making it easier for first-timers to learn while investing.
“The mistake many beginners make is trying to figure everything out alone,” explained a financial adviser in Abuja. “Professional guidance helps you avoid costly errors, especially in a volatile market like ours.”
Monitor your investment
Monitoring your investments regularly is equally important. Keep track of your portfolio at least once a month, paying attention to company performance, industry developments, and broader market trends. Staying informed enables you to make timely decisions, whether it’s adjusting your holdings or responding to new opportunities. Regular monitoring also helps you avoid panic selling during market fluctuations, ensuring that short-term volatility does not derail your long-term plans.
Starting small makes the difference
For Nigerians like Chika, a young professional in Lagos, dipping her feet into the market was both exciting and intimidating. But starting small gave her confidence.
“I bought my first shares with just N10,000,” she recalled. “It was a small step, but it made me feel like I was part of something bigger than myself. Over time, I realised it’s not just about money; it’s about securing my future.”
Her experience echoes the advice of experts: don’t wait until you have millions before investing. With as little as N5,000 to N10,000, anyone can begin the journey. The key is consistency, adding little by little over the months and years.
Why it matters now
Nigeria’s economy has been through tough times, currency swings, inflation, and fluctuating oil prices. But even in uncertain times, the stock market offers opportunities for ordinary people to participate in the growth of leading companies like Dangote Cement, GTCO, MTN, etc.
For students looking to learn early, young professionals planning their financial independence, or retirees hoping to preserve wealth, the market provides a platform to grow funds in ways savings accounts may not.
