First time investing on NGX

A share is part-ownership of a business: a claim on its profits and a vote at its meetings. When GTCO earns money and declares a dividend, you get your slice. When the business struggles, your slice is worth less. Everything else in investing is detail on top of that.

Your shares are not held by your broker. They sit in your name at the CSCS (Central Securities Clearing System), the NGX's central depository. The broker is your access point; the custody is yours. If your broker disappears tomorrow, your shares do not.

You need a stockbroking account, which comes with a CSCS account number. Opening one takes a BVN, ID, and usually under a week. Many brokers have no minimum, and funding is a bank transfer.

Trading is not free. Between brokerage commission, NGX and SEC fees, CSCS charges and stamp duty, expect roughly 2% of your money to go to costs across a buy and a sell. That means a stock has to rise about 2% before you break even, and it is the quiet argument against trading often.

The main NGX session runs from 10:00 to about 14:20 Lagos time, Monday to Friday. Most stocks can move at most 10% in a day in either direction; when a stock is 'limit up' on heavy demand, placing an order does not mean it gets filled.

Liquidity is uneven. The large names (DANGCEM, MTNN, the tier-1 banks) trade hundreds of millions of naira daily. Many small caps trade thinly enough that your own order moves the price. As a beginner, staying in liquid names removes a whole class of problems.

NGX trades settle three working days after execution. Sell on Monday and the cash is withdrawable from Thursday. Buy on Tuesday and the shares land in your CSCS account on Friday.

This matters most around dividends: to qualify for one, your purchase must settle before the company closes its register. Practically, buy at least three working days before the qualification date or you are buying the share without the payout.

P/E ratio: how many naira you pay for ₦1 of annual profit. Nigerian banks at P/E 3-6 look absurdly cheap by global standards; some of that discount is real risk being priced in. Compare within a sector, never across sectors.

Dividend yield: last year's dividends divided by today's price. A 7% yield pays you ₦7,000 a year per ₦100,000 invested, before the 10% withholding tax. A very high yield is sometimes a warning, not a gift: the market may be pricing in a cut.

Market cap: price times shares outstanding, the price tag on the whole company. A ₦0.50 stock is not 'cheap' and a ₦600 stock is not 'expensive'; only the total valuation against profits tells you anything.

Any naira return has two benchmarks. The first is inflation: a 20% portfolio gain in a year of 30% inflation lost you purchasing power. The second is the T-bill: the government will pay you roughly 20% with effectively no default risk. Equity risk only makes sense for returns above that hurdle, or for businesses you believe will compound through it.

This is not a reason to avoid stocks. It is the reason to be selective about them, and to let T-bills do the boring work in your portfolio while equities do the ambitious part.

Start with businesses you can explain in two sentences. Size positions so no single one can ruin you: a common rule is no more than 5-10% of your portfolio in one name while you are learning.

Buy in stages rather than all at once; pre-committed dates remove the 'is now a good time?' paralysis. And write down why you bought, because in six months the price will have moved and the reason is the only thing that tells you whether to hold.