Buying Stocks of publicly traded companies is one of the ways of building wealth that can even be passed to generation upon generation if done in the right way.
Most countries in the world have a stock exchange platform where the stocks of public companies in the country are listed for paper asset purchases.
It is important to note that not all public liability companies (Plc) are listed in stock exchange platforms for public purchase of the stocks.
Listing public companies on a stock exchange platform has procedures and requirements that a public company must meet before the listing of such company in the stock exchange for buying and selling of the company shares or stocks.
In Nigeria, there is the Nigeria Exchange Group (NGX), In South Africa there is Johannesburg Stock Exchange, In the United Kingdom, there is the London Stock Exchange, In the United States of America, there is New York Stock Exchange.
Companies go public for so many reasons which can be to raise more capital from the public to launch certain products, buy more equipment needed for the company’s growth, for expansion, and many more. Many rich companies are private companies, and it is because the owners or founders prefer building their business as a private company possibly to avert losing control of their business, especially at the early stage.
Individuals who love a product or service of a public company traded in a verified stock exchange could decide to buy a piece of the company by buying stocks of the company.
New companies that are newly registered in a stock exchange can spring up people willing to invest in such companies after analyzing the potential future growth of the company. In some cases, they turn out to be right while in other cases they lose money after the company never recorded growth.
It is important to state clearly that stock investment is not a get-rich-quick scheme and people should not invest to expect overnight wealth. Stock investment requires patience and conducting due diligence of a company before investing in such company stocks.
The first step of stock investment after marking company stocks to buy should be to look for a broker. It is rare or impossible to buy stock without going through a broker. It is expected that one should be careful to use verified stockbrokers approved by the stock exchange of the country.
Verified stockbrokers who are allowed to trade securities are listed in the stock exchange platform of the country. Some platforms show the performance of the stock brokers and the general market performance.
Most people are wealthy not because of their physical cash at hand but because of the worth of their shares and assets in their business or other people’s business.
After choosing a broker platform, one can now proceed to register in the broker platform and follow instructions. The broker buys stock on behalf of the client for a brokerage commission or fee done during the purchase or sale of assets in short- and long-term investments.
During registration, the k intending investor also states his or her next of kin with details of the next of kin. This means that the stock ownership could be passed on to the next of kin upon the death of the investor. Investors should endeavor to state their next of kin who can inherit the wealth.
One of the rare things people don’t consider when buying stock is the broker fee. It is important to consider the broker’s rate or broker fee that the broker charges. If the broker fee is high it may be difficult for the investor to make a profit as a larger percent of the stock dividends, market increase of the portfolio, and others may go to the broker when the fee is high. It should be considered.
Most people who have made money from stock investment recorded success in the long term and never in the short term. The power of compounding makes a huge difference.
Starting early to invest and making continuous investments proves better after some decades compared to the person who started investing in old age. People also get wealthy in other types of investments so people choose what works for them.
Some people have bought stocks of certain companies but ended up losing their principal even after many years. It could be possible when such a company never declared profit or recorded good performance in the stock market. People should research the companies that are undervalued or companies that have the potential to grow in the future beyond the current market capitalization.
In Nigeria, many public companies are traded in the Nigeria Stock Exchange now Nigeria Exchange Group (NGX) and a little research will expose intending investors to the list of companies that are listed in the stock exchange platform including those that have delisted from the exchange platform.
Building wealth comes with financial literacy and one should be very strategic in stock purchase. Buying stock because everyone is buying may not be the best way to be strategic in investment. One may be lured into buying when other existing investors are exiting.
Analysts have proven that there is no best time to buy or the best time to sell. In a clear explanation, delaying buying a particular stock and the company stock performing better in the end breeds regret while in some occasions it turns out to be a wise decision not to buy. On the other hand, delaying selling the stock when the stock performed better with the hope of further increase of the stock performance can lead to further increase or heavy fall without recovery. The risk appetite and the risk tolerance of the investor makes the difference,
Going further, someone can stay in Nigeria and buy company stocks traded in New York without steeping a foot in United States. It becomes one of the advantages of technology. Stocks traded in New York stock exchange and every other place can be purchased with a smart mobile phone or computer at a finger command unlike in the olden days that manual way of buying stock existed.
In Nigeria, one can stay at the comfort of the house, office or anywhere and buy stocks of companies that are publicly traded without visiting the physical office of the broker for manual purchase.
People can also appoint wealth managers to manage their investment with a fee. It is important to select wealth managers that have proven themselves to be expert in their field instead of choosing those that are aspiring to perspire.