Before the internet became a global phenomenon, an investor had to locate a stockbroker, fill out forms, and wait till the end of the financial year to receive dividends which were usually delivered through the postal service.
Thanks to the internet, it was even more difficult to invest in foreign stock back then than it is now.
The rise of FinTechs has disrupted the way foreign investments and cross-border securities transactions are being handled globally.
With an internet connection and a smartphone, You can now buy stocks, Exchange Traded Fund (ETFs), and many others right on your phone.
Not just that, but also accompanied it is the fact that you can monitor the performance of your portfolio in real-time: anywhere and at any time with a browsing data-enabled device.
Also, you dont need to hold a U.S. passport nor do you need to be a U.S. citizen to buy shares in U.S-based companies, technology has taken care of that.
Why Should You Invest In the Stock Market?
The first thing to do before buying shares in any company is to check the integrity and the legitimacy of such a firm if it has the required licence to carry out business.
Sometimes in May 2021, the Securities and Exchange Commission (SEC) said it was monitoring brokers that sell foreign stocks in Nigeria.
The commission can monitor and regulate stocks operating within Nigeria’s jurisdiction, as such, it has the power to licence firms that offer foreign stocks to Nigeria. Make sure that any broker you decide to work with is licenced by the SEC to avoid damages.
Here are some of the reasons why you should invest in the stock market as a Nigerian.
1. You get to be part of the company you love.
One thing about buying shares is that you get to own a part of the company you invested in. Purchasing stocks enables provides you with a proxy vote, allowing them to vote remotely and normally electronically or via email on various issues that will be decided at shareholder meetings in future.
2. You can build wealth by investing in Stocks.
For most people who seek out means to build passive income, investing in the stock market is one viable means to build wealth.
Investing in the stock market is not a quick way to make a lot of money, and a lot of these investments take time to mature, it should rather be seen as a long-term way to accumulate funds for retirement.
3. Investing in the Stock Market enables you to diversify.
Diversification is essential when you intend to own stocks. There will always be risks involved despite where an investor decides to invest their money, but through diversifying asset classes in which investment is made, investors can obtain better returns. Should one invested sector underperform, other investments should balance out the investor’s portfolio?
4. You do not need to be a financial guru to invest in stocks.
Owning stocks at a company does not require you to be a guru, all investors simply have to research the companies they are interested in to see what potential they have. With these metrics, a potential investor can take calculated risks while investing.
5. It is superior to other investments.
Investing in stocks is not an entire haven but its more preferable when it comes to wealth creation.
Stocks have a history of having earned investors a lot more wealth than other investment options as they return the highest potential returns when considering a long-term investment. As long as such companies exist, and you invest in them, you get to make money off them anytime.
How Do You Buy Your First Stock In Nigeria?
Investing in stocks provides an opportunity to learn and grow financially. In entering the stock market, investors have the opportunity to learn about the stock market, how companies operate in addition to the factors that determine the success or failure of such companies.
Here is how you can buy your first stock as a Nigerian living in Nigeria.
1. Understand what the Stock Market Is.
The first thing you need to do before investing in the stock market is to understand what the stock market is and how it works.
Stocks represent ownership equity in the firm and give shareholders voting rights as well as a residual claim on corporate earnings in the form of capital gains and dividends.
A stock is a financial instrument that represents ownership in a company or corporation and represents a proportionate claim on its assets. In other words, Stocks are also called shares or equity.
Owning stock means that a shareholder owns parts of the company equal to the number of shares held as a proportion of the company’s total outstanding shares.
For instance, an individual or entity that owns 100,000 shares of a company with one million outstanding shares would have a 10% ownership stake in it. Most companies have outstanding shares that run into the millions or billions.
I wrote a comprehensive guide on how to understand shares as a beginner. Check out the link to the article to learn more.
2. Get Your Personal Document For Verification (KYC).
Understanding the verification process involved in the finance industry is necessary when trying to buy foreign stocks online.
The process that has been put in place to solve this is called the (KYC). The Know Your Client (KYC) or Know Your Customer (KYC) is a process to verify the identity and other credentials of a financial services user.
KYC is a regulatory process of ascertaining the identity and other information of a financial services user.
The Know Your Client (KYC) process helps against money laundering and prevents the financing of terrorist activities.
It is a mandatory process required by many financial-based applications to ensure that the customers are actually who they are claiming to be.
To be mandated by the law, the Know Your Client (KYC) process also helps financial institutions in several ways such as;
1. Limits fraud that results mainly due to the hiding of identity.
2. Prevents money laundering and other anti-social activities.
3. Brings stability and investment to the country, as it makes the financial framework more trustworthy and less risky.
4. Decreased uncertainty allows institutions to lend more to customers and increase their profits
The KYC process is carried out for both individuals and organizations. KYC authentication is based on the verification of identity and place of residence.
The documents required for the KYC process for individuals include the usual documents that individuals generally use, such as:
1. Driver’s license.
3. Any Documents issued by the state or the federal government.
4. Utility bills, such as telephone, electricity, gas, etc.
5. Bank statements, and many more.