When to buy shares

Posted by Felix Okoli on Friday June 29, 2012 11:3:0:

If you have a desire to buy shares in Nigeria, then it would not be a bad investment idea as buying and holding on to capital assets like stocks are an easy way to grow money rather than saving it in the bank for the long term

Things you will need
- Funds
- Application form
- A stock brokerage company (If buying from the secondary market)

The markets
In the capital market, there are 2 markets and they are called primary and secondary market. The primary market is more like a public market which allows the public and companies initial participation in buying and selling of shares on their own mostly directly through the banks. It is in the primary market that I.P.O.s are offered to the public and you can buy without having to go through s stock broker.

In the secondary market however, not everyone is allowed direct participation as only the market dealers are allowed direct trading. So individual investors in the secondary market can still buy and sell shares but will have to go through the registered securities company.

How to buy shares
You can buy shares in Nigeria at any time depending on which market is available. Most direct purchases however go through the secondary market so you can buy by filling an application at a stock brokerage firm and your cscs account gets credited with the shares in a few days. You will jus pay an extra commission to the broker for their service - about 2 to 4%. You can also buy from banks when an initial public offer is being made and for that you don't need to pay any commission or a broker.

Tip for investing
- Try to get perfomance reports for the company you want to invest in to know its market strength and optimism
- Decide on which industry to invest in
- Diversify your investment. Don't put all your fund in a single company
- Buy when low and sell when high
- Buy after a sell rally is ending