The Nigerian Stock market can be unpredictable and can be riddled with uncertainty. While it can seem confusing from the outside (risky even), there are a few tips that have been tested and tried. These tips can serve as a trusted guide for new investors looking at coming into the stock market, or for experienced investors looking to retire financially comfortable.
Tip 1: Investing is a rational sport. No emotions
Warren Buffett, Chairman of (Berkshire Hathaway) has been quoted as saying that “Success in investing doesn’t correlate with IQ … what you need is the temperament to control the urges that get other people into trouble in investing.”
When it’s time to make investment decisions, it’s important to make sure your decisions are based on the data available to you, and not how you feel about a certain company. You can hurt your portfolio returns by making too many hasty decisions in a short period. An important part of being an investor is cultivating the temperament to delay gratification. This is an important requirement for long-term success.
Tip 2: Do your own work
More people have lost money by chasing down a hot tip about a stock or trying to pre-empt market sentiment. Regardless of how reliable the tip is, you should not be betting serious money on information whose source you cannot readily verify. If it’s your money you want to invest in a company, you should partake in a deep-dive research, to understand the structure you want to bet on. This is best practice.
Tip 3: Understand the long-term trajectory
The stocks you want to invest in are companies, and because there are so many different ways you can invest across different companies, one sure-fire way at homing in on the right choice would be to look at the stocks from the point of view of the strength of the companies behind them. By considering the company’s position in its industry, operational efficiency and its long-term prospects, you can make a better selection of the stocks to invest in.
Tip 4: It’s a time game
The best investors buy equity because they expect a return on that investment, but only over a period of years. It is this long-term outlook that helps them select strong performing stocks and settle with them. They don’t expect to wake up the next morning and get a 100% increase in share price. They know they’re in it for the long haul, and this helps them make more tempered, strategic buying and selling decisions. One particularly smart buying strategy for investors is to “buy the basket”. When an investor is not sure which company in an industry will do best, they spread their investment across all the big players in that industry.
As a newbie investor, it is useful to take time and do an extensive research before investing in the stock market, as investing is a valuable skill that will reward you over time. Investing these days has moved from the slow, rigid process that it used to be. Now, you can make investments from the comfort of your home, using investment apps.
One such app is InvestNow by United Capital Plc. It is a safe, secure and real time investing platform that offers live securities trading, as well as beneficial stock recommendations by expert traders in the market. You can download the InvestNow android app from the play store, set it up in as little as 5 minutes, and begin trading.
Visit investnow.ng to learn more and start trading.