Making Money from Shares – Part 10: Income Statement

Profit and Loss Account or Income Statement or Statement of Comprehensive Income reports the financial performance of a firm over a period of time, for example one year. The components of the income statement as explained in Part 8 are: 1. Revenues: These are inflows received or due for goods sold, services rendered or other…

Making Money from Shares – Part 8: Financial Statement

The next 5 parts will provide an introduction to financial statement another key component of the investment tool kit. Firms report their financials in order to show their financial performance over a period to enable investors, lenders, and creditors etc. to make economic decisions. Analysts, investors, lenders etc. use the financial statement data and other…

Making Money from Shares – Part 7: Understanding Risk

In order to manage your investments well, you need to have an understanding of risk and an appreciation of your risk tolerance. That is do you tolerate risk well or do you stay up at night worrying about the movement in the value of your stock market investments? What is risk? Generally, it is defined…

Making Money from Shares – Part 6: Investing Tools

In Part 5 we discussed various investing strategies. Once you have decided which investment strategy to follow based on your risk appetite, return expectations and horizon, you need to acquire the tools required to implement the strategy. It is at this stage of the process that most investors fail to follow through. Without these tools…

Making Money from Shares – Part 5: Investing Strategies

We have in Part 4 identified 86 potential companies for investing. How do we select 8 to 15 out of these to invest? The returns we make will ultimately to be determined by the companies we select. A poor selection could lead to huge loses while a good one could be the beginning of a…

Making Money from Shares – Part 4: Identifying Candidates

There were 198 companies listed on the main board of the Nigerian stock exchange at the end of 2013. There are a few more companies listed on the second board (ASME) for smaller companies but they are thinly traded and suffer from corporate governance failure. Therefore they are high risk and best avoided. Of the…

Making Money from Shares – Part 3: Record Keeping

Keeping records is essential if you want to succeed in investing in the stock market. There are two main reasons for keeping records: for tax (capital gains tax and withholding tax on dividend) and for feedback (to work out your performance and to learn in order to improve performance). Luckily in Nigeria the tax is…

Making Money from Shares – Part 2: Getting Started

In Nigeria, the only Exchange for investing in publicly traded shares is the Nigerian Stock Exchange (NSE), which commenced operations on 5th June 1961 as Lagos Stock Exchange. It was transformed into the NSE on 2nd December 1977 with branches in Lagos, Port Harcourt and Kaduna. Regular trading on the NSE runs from 9:30 AM…

Making Money from Shares – Part 1: Introduction

I decided to write this series in response to questions I received from friends. It will be a long series broken down into several parts to make it easier to read. The series will be devoted to how to invest in shares quoted on the Nigerian Stock Exchange. Part 1: Introduction What is Investing? Investing…