If you are looking for ways to increase your income and build wealth then you should consider investing stocks. Historically, stocks have been one of the best ways to invest money and grow your wealth.
Thanks to compounding interest, the value of shares can grow very large over a long period of time.
If you would like to start investing in shares you need to first make sure you have a reliable income from work or other investments. It is important that you never invest more than you can afford to lose.
We can recommend building a stock portfolio over time, consistently investing and only selling when you need to.
To start investing you will need either a stock broker or a brokerage account.
A stock broker is a financial professional who buys and sells stocks for a living. They can simplify the process of purchasing stocks but take a commission for each transaction.
A better option for beginners is to apply for an online brokerage account where you take control of your trading. Often your bank will have a platform where you can trade shares. If they don’t there are many low-cost platforms you can use.
Once you have your account set up, you can start searching for the stocks you want to invest in. You will need to decide what type of shares you are looking for based on your risk appetite and experience level.
We recommend that beginners look to purchase large “blue-chip” companies. Those that have a track record of performance on exchanges with a lot of liquidity.
Liquidity refers to how many people are transacting on the market. This means you can easily purchase and sell shares if you need to.
Examples of blue chip companies include Coca-Cola (NYSE: KO) , Disney (NYSE: DIS), PepsiCo (NASDAQ: PEP), Walmart (NYSE: WMT), General Electric (NYSE: GE), IBM (NYSE: IBM) and McDonalds (NYSE: MCD).
If you are interested in investing in African listed companies, the biggest and most liquid you can consider are Safaricom Limited (SCOM.ke), MTN Nigeria Communications Plc (MTN.ng) and Dangote Cement Plc (DANGCE.ng).