Contrary to popular belief, wealth creation in the Nigerian stock market needs no financial background
The road to wealth creation in Nigeria as an investor is paved with failures and uncertainties, but the result is sure if you are willing to start and set clear financial goals.
In this write-up we will reveal proven strategies for wealth creation. Tested and trusted systems that have been used by newbies in the Nigerian stock market just like you, who wanted to create wealth and did not know where to start from. So, stick with me as I take you through this journey.
Be An Investor, Not A Trader
An investor works with a long-term goal in view, while a trader has short-term financial goals. Traders tend to want to outsmart the market by moving too quickly in and out of the market, which in the past has resulted in significant loss of investment capital, especially for newbies like yourself. But investors on the other hand approach the market to create wealth in the long term, which gives them the best returns on their investments over time.
Invest in an index fund, not an individual fund
For new investors, deciding what companies to invest in can seem like an impossible task. But index funds help to solve that problem, by helping investors automatically diversify their funds across a range of companies. Thereby, simplifying the entire investment process.
For instance, we manage a fund for a group of 100 investors all contributing 100,000NGN a piece, giving a total of 100,000,000NGN. We can decide to allocate 10% of the fund to buy stocks in UBA bank, 20% to BUA foods, 40% to UAC on the Nigerian stock market and so on. Simply investing capital in index funds will earn an investor with no financial background 8-10% profit, without additional efforts.
Research on brokerage accounts
Tax payments can significantly impact returns on investment. So, to prevent considerable loss to profits earned from capital invested, choose your brokerage account wisely. Carry out proper research on the tax implications of a brokerage account before signing up on the platform. Because your ultimate goal as an investor is to get the highest possible return on investment and not to incur tax losses.
Use a Robo-Advisor to Invest
As an investor with no prior experience using a Robo-Advisor is not a good idea. As it eliminates the uncertainties of investing. Robo-Advisor online brokers inquire about your investment goals, and risk tolerance and tailor your investment portfolio accordingly.
Reinvest your dividends
Spending your dividend as a new investor can be tempting, but do not fall victim. Remember we have a long-term goal to build wealth. Reinvesting your dividend brings in higher returns in the long term, as it allows you to buy in more shares and increase compound earnings. Also, dividends are most likely to increase in value through compounding, so therefore as a newbie investor don’t eat your profits at once, re-invest.
Bottom line
Building wealth, and becoming a successful investor in the Nigerian Stock market does not require financial expertise at any level. Instead of chasing every new and hot stock on the market, just implement the proven and trusted strategies given above and you will be on your way to success as an investor.
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