Getting started

A portfolio can rise in value and still leave you poorer than when you started. That is not a trick of accounting. It is what happens when the price of everything you'd buy with that money rises faster than the portfolio itself. The number on your statement is the nominal return, the percentage change in currency terms. The number that tells you whether you actually gained anything is the real return, the nominal figure adjusted for inflation over the same period. In a high-inflation economy, the second number is the one worth your attention, and the first one on its own can mislead you.

Compounding rewards patience more than it rewards precision. Most explanations of it start with the formula and lose the reader before the point lands. Start instead with two savers and watch what twenty extra years does that a better rate cannot.

Ask a new investor to describe risk and many will talk about missing out on gains. Ask about return and the answer comes fast: more is better. What beginners get wrong is not the upside. It is how badly, and how often, things can fall before they turn around. That gap, between the loss people picture and the loss that actually happens, is where many early investing mistakes come from.

Dividend season on the NGX runs on two separate mechanics that get lumped together in beginner conversation: the cash dividend and the bonus share. They are not the same thing, and the yield number everyone quotes tells you very little about either on its own.

Open an account with less money than you've mentally budgeted for this. That's the practical argument this guide makes, and the mechanics of how a Nigerian trading account gets set up back it up.