A stock is a certificate or piece of paper that verifies you own a portion of a company while trading in Stock is the process of buying and selling of shares. In other word, it is the selling of one’s holding in a company’s shares. Its involves an investor selling his or her share of a particular company for cash or buying another investor share who is willing to sell either all or some of his or her shares from a particular company.
The Nigeria Stock Exchange (NSE) oversees the routine of buying and selling of shares of any companies for cash and such transaction are done through what is called secondary market in stock trading. Share bought in the primary market (public offer) can only be sell in the secondary market. Therefore, the secondary market is a market in stock trading where shares are exchange for value and money.
Trading in the secondary market is done by a Stock Broker from a registered stock brokering film with the Nigeria stock exchange. You cannot sell your shares in the secondary market by yourself except through the aid of a broker. This broker would open an in house account for you with his or her film and a Central Security Clearing System (CSCS) account with the Nigeria Stock Exchange on your behave.
Stock trading can be for short term purpose, medium term purpose and long term purpose.
Many people tend to run away from the stock market nowadays due to the global financial meltdown that occurred. I do tell people that the best time to invest in stock is now when many people are running away. You don’t have to wait for the bear period when stocks start rising before investing. Start building your investment portfolio now. Even in the face of the meltdown you can still make heavy cash from the stock market if you follow trends and know exactly when to get in and pull out. The stock market is a swing, there are lows and there are highs. If you learn how to buy low and sell high, you are in business.
Important Factors to Know Before Choosing a Stock to Buy
Like I said earlier, if you follow trends and know exactly when to get in and out of stocks trading you are on your road to millions.
1. Before buying any stock you must have it at the back of your mind a target price of coming in and a target price of pulling out. Doing this will not only save you of losing your money due to greed because you cannot beat the market always but will also help you to build your wealth.
2. Go through the annual report of the company you are aiming to invest in. check the last five year financial report and be sure it is free of financial problems. Turnover growth and profit after tax. Check the chairman and MD’s comments on their yearly performance and turnover.
3. Make research on people’s opinions and publications on the stock and company you want to partner with.
4. Analyze the profitability of the company you are picking. If the company is making profits, check where the earning are comings from and be double sure the earning are predictable.
5. Go through the quarterly performance of the company you are picking. This alone can be your sure bet to making fortunes from stock investment if considered. If the company you are investing in has a solid record in the first quarter of the year nothing should delay you in putting your money into it. You can use this analysis for the rest quarter of the year.
6. Before picking any stock to invest in, consider the business environment of the company and government policies on the company’s kind of product. If the business environment is favorable to the company and government policies prepared a good business condition, nothing should stop you from investing into that company.
7. Check the financial health status of the company you are picking. This implies that you should be sure if the company is not bankrupt, does the company have enough cash flow statement? Will the company be able to meet its financial obligation when due? What is the level of its indebtedness? A correct answer to these questions means enough money in your bank account.
Type of Stocks to Consider For Maximum Profit
Penny stocks are also called minor stocks or micro cap stocks whose price is usually less than N5.00K in the stock market. Penny stocks are under-priced stocks in the stock market. Most stock brokers often leverage on the strength, profitability and capitalization of companies with penny stocks and then take advantage of subsequent capital appreciation in the stock market.
Investing in penny stocks takes proper assessment of the company’s profitability and consideration of the points listed above. With this type of stocks you can make over 200% returns on your investment. Imagine buying a penny stock at the rate of N3.00K per unit with N60,000 (20,000 unit of shares) and after some few months due to the company’s capital appreciation it is now selling for N17.00K per unit. This means you now have N340,000 that is over 500% in profit. Don’t dance azonto yet, you can also get your fingers burnt by investing in penny stocks if you do not do your assignment very well because you are going to wait till eternity waiting for a penny stock to rise, rather, it will keep falling.
BLUE CHIP STOCKS
Blue chip stocks are stocks that are been traded on the floor of the Nigeria Stock Exchange in the secondary market. This type of stock is financially safe and can be bought cheaply through the help of a Stock Broker. Most people lose out on the enormous wealth of opportunity in blue chip stocks due to the believe that these type of stock are cost.
Why not take a bold step today by approaching a reputable stock broker. Make inquiry of blue chip stock to buy if not more than 100 units and make your placement. You might just start a journey on your road to millions through blue chip stocks investment.
A debenture stock is a long term debt instrument issued by corporate organization for the purpose of raising funds. A debenture is backed by all assets of a company that has not been pledge otherwise. You as a debenture holder functions as a lender to the issuer (company) of the debenture and in return a specific rate of periodically interest is paid to you. This is quite different from the normal stock with offer its investors dividends.
A lot of companies are already borrowing from the investing public and most of the time, their tenor of investment are shorter with maximum profit.
For you to achieve financial breakthrough in life, let your money work for you. Let it perform a function that will yield returns. Don’t spend it recklessly, don’t waste it on irrelevant things rather give your money out in an investment. Invest in stocks today and keep smiling to the bank.
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