Investing in stocks can seem overwhelming when you don’t know how to begin. The chances of losing your money make you anxious but you also don’t want to leave your money sitting idly in your bank account. 

We understand where you are at right now which is why we’ve put together a list of the important things you need to consider before purchasing any stock.

Figure out your investment goals

With investments, the ultimate goal is to make (or not lose) money but our specific goals may vary. You may be investing so your money doesn’t lose value due to inflation, to make large returns or to get passive income.

If you’re looking for income, then your best bet is to invest in companies that issue out dividends & have good dividend yields.

If you’re looking to build wealth, then you probably have a higher risk appetite & can invest in promising startups. 

If you’re looking to preserve your money, then you probably have a lower risk appetite and may be interested in more stable companies that already make steady profits.

Whether you have one or more of these goals, the most important thing is to identify them and diversify your portfolio accordingly.

Know the company

Before you invest in any company, you should have answers to basic questions like what service the company provides,  the product they sell, their industry,  the countries they operate in and how they make money.

You can also check out the industry’s Exchange-Traded Fund (ETF) page and compare the performance of the company with other companies in that industry.

Price to earnings ratio (P/E ratio)

This is a company’s share price in relation to its earnings per share. It tells you the share price investors are willing to pay per $1 of earnings. For example, if a company’s P/E ratio is 5, it means investors are willing to pay $5 per $1 of earnings.

A low or high P/E ratio can tell you whether a company is undervalued or overvalued. However, this isn’t always the case so ensure you do your proper research on the company itself before making your decision and also compare the company’s P/E ratio with other companies in its industry.

Dividends

Another good way to know if a company is worth investing in is to look at its dividend. A dividend is a share of a company’s profit that it pays to its shareholders. Not every company pays out dividends but if you’re looking to make occasional passive income, investing in one that does would be a good idea. Large companies who make steady profits typically pay the best dividends while companies who are in their early stages may be unable to issue dividends for a while. 

If the company you’re interested in pays dividends, you should observe its dividend yield over the past few years. A sudden increase may not always be a good sign, especially when you can’t point to any obvious positive reason from your research in step two.

Earnings before interest, tax and depreciation & amortization (EBITDA)

Before you invest in a company, you might want to know how much they make before interest, tax, depreciation & amortization are deducted. EBITDA shows that the company's earnings are enough to cater for interest on debt and for shareholders too. It's a more transparent way of determining a company's value.

Debt to equity ratio

This means a company's total debt relative to its market value. The D/E ratio can be a good indicator of a company's financial performance. The standard figure varies for some industries so you should compare the D/E ratio of the company with other companies in its industry to make sure it’s not above the industry average.

Price charts

While these may not be easy to read by beginners, you can simply observe the movement of the chart. A chart that rises from the left to the top right typically indicates that the company has good performance because it shows the company’s share prices have increased over time. However, a chart that decreases to the bottom right may indicate rocky performance. 

You should know though, that the stocks market is volatile which means that it is normal for a company to lose value and regain it. So when observing the price charts, take a look at the prices over the years & consider its long-term performance.

Next steps

Now that you’re done researching the companies you want, you’ve probably streamlined your options or added some more. The next step is to start investing. Visit your Buycoins account to get started with as little as ₦500.

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Tokenized stocks are collateral-backed representations of shares traded on stock exchanges. This means their prices are pegged on a 1:1 basis to their traditional counterparts and when there’s a rise in the price of the latter, their prices also increase.

What does holding Tokenized stocks mean for you?

For you as a trader, when you own tokenized stocks, you get all the economic benefits that come with owning shares of that company. For example, if you had purchased token TSLA stocks prior to the 25th of October, 2021, your investment would have risen by greater than 12% that week. However, because Tokenized stocks are only derivatives of traditional stocks, you do not get to participate in the legal aspect that comes with owning shares. For example, you don’t get to sit in on stakeholder meetings, have access to legal documents of the company or voting rights. The good news is that if you’re a regular trader, you do not need all these as the most important thing to you is growing your wealth.

Why should you invest in Tokenized stocks on Buycoins?

Fractional quantities - The shares offered by most companies are worth a lot of money and purchasing even 1 share of them can be quite difficult for the average person. For example, 1 share of AMZN currently goes for over $3,000 (approximately ₦1,725,000) which is really expensive given the current state of the economy. However, with Tokenized stocks, Buycoins allows you to buy as little as ₦500 of each stock which means irrespective of your financial status you get to invest some money in the companies you believe in and gain when their value rises.

Available for 24/7 trading: With traditional shares, you are restricted to the opening and closing times of the stock exchange. However, tokenized stocks trading do not have this restriction. This means you can trade them 24/7 on your Buycoins account, liquidate them and profit from price movements at any time of the day.

Simplified investment: Now that Buycoins offers stocks, you get the opportunity to diversify your portfolio in one spot. You can easily split your funds across different coins & stocks and watch their progress from the comfort of your Buycoins app.

Get Started Now

Future potential - At this point, you may be wondering “what unique difference do tokenized stocks have?”.  Well, asides from the benefits listed above, there aren’t any more major differences right now. However, when you think about the current innovations happening because of digital assets and the countless possibilities achievable on the blockchain, tokenized stocks seem to be the better choice. Not only do you get the economic benefit from purchasing the stock, but you also get to tap into the crypto potential we expect to actualise in the nearest future. 

So, what do you think? Are you ready to trade tokenized stocks? Click the button below to get started!

Start Trading Today

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This is a simple guide on how to do this:

Step One: Click ‘Coinlock’ on the Dashboard

Step Two: Select the coin you want to lock.

Right now, USDC would be a great pick.

Step Three: Enter the amount of USDC you want to lock

Step Four: Choose a lock duration

Step Five: Review & Lock.

You’re done!

Try it out.

PS: If you don’t already have USDC, you can easily buy this on Buycoins, too. Here’s how.

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Because Cryptocurrencies are volatile assets, many investors prefer to trade them. Trading Crypto can provide substantially larger returns than traditional investments if you can time the market correctly.

As a beginner, things can easily get very tricky; this is why we’ve put together this guide.

We’re aware of the knowledge gap in Crypto and have made it our responsibility to educate our users about it. We put together a beginners course that can help you understand Crypto trading as a newbie. You can get access to that here. We also started a monthly session on Twitter where we have enlightening discussions about Crypto.

If you’d like to learn important tips that will definitely help you trade safer and better, here are some helpful ones:

6 tips to help you trade Crypto safely

Secure your wallet: Since crypto allows you to ‘be your own bank’, it’s important to keep your account safe. Here are two ways you can ensure that your account is safe:

• Never share your password: Make sure all your transactions are carried out by you. Sharing your password means you’re giving third party access to move your assets. It goes without saying that doing this is risky.

• 2FA: Two-factor authenticator is an extra layer of security that helps keep your account safe. On Buycoins, 2FA is required when carrying out certain transactions. Setting up your 2FA helps you further protect your account.

Do your research: You must dedicate a significant amount of time to research before investing. It’s not enough to just do your research before you start investing; it’s important to also keep up with the news that affects the market. Even the smallest political or social unrest can devastate the value of any asset. As a result, being up to date on industry news can help you prepare for any potential upward or downward trends. You will know what to expect when you come to trade by learning how your chosen market operates, how it has performed in the past and keeping up with projections for the future.

Various risks are associated with investments, but you can ensure a more successful and seamless experience by regularly conducting thorough research.

Don’t trade with money you can’t do without. As a rule, always be sceptical. Even after doing your research, nothing is absolutely guaranteed. Don't be so confident in an asset that you’re willing to invest your entire savings, rent, school fees or any money you need for the day-to-day running of your life.

One of the most important things you need when trading is the ability to make very objective decisions. You lose that ability to make a very objective decision when you’re overly emotionally connected to the money you’re investing.

Have a trading plan: Allowing your emotions to dictate your trading activities is a sure way to lose money. To avoid/minimize this, it’s important to have a trading plan that you ensure you stick to.

A trading plan lays out how a trader will find and execute trades, including the conditions under which they will make buying/selling decisions, the size of the position they will take, how they will manage them, what securities can be traded, and other rules for when to trade and when not to trade. A trading plan is basically your rule book for trading.

Some of the things that should be in your trading plan are:

• Your motivation for trading

• Your trading goals

• Your risk appetite

• Personal risk management rules

• The markets you want to trade

• How much you want to spend trading per week/month

Avoid FOMO: FOMO is the acronym for ‘Fear of missing out’. It's the fear of losing out on a potential profit if you don't buy a cryptocurrency as soon as possible, regardless of its current price. The fear of missing out can cause you to abandon your better judgement of sticking to your trading plan.

Source: DailyFX

Once you start to feel like you’ll miss out if you don’t immediately take a trade that goes against your trading plan, sit back and do some more research before making a final decision. You’re better off missing the trade than getting stuck in this cycle.

Always learn from your mistakes: Sometimes, your trade may not go as planned. When this happens, always assess the problem and try to determine why it happened. Take advantage of that experience for your next trade, which could be better because you know more now than you did before.

If you enjoyed reading this and have some other tips that work for you, please share them with us.

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We are excited about this, and we’re happy that the reception has been great so far. We understand that you might have some questions, so this article addresses general questions about tokenized stocks.

What are tokenized stocks?

Tokenized stocks are tokenized derivatives that represent equity shares in companies that have gone public, on regulated exchanges such as the London Stock Exchange (LSE), New York Stock Exchange (NYSE), Nasdaq Stock Market (NASDAQ), and a host of others.

Some examples are Apple, Amazon, Facebook, Tesla, etc. 

How do they work?

When you buy 1AAPL (the tokenized derivative of Apple stocks) on Buycoins, you have no ownership in Apple Inc.; you can only benefit from the economic performance of Apple stocks.

Tokenized stocks are pegged 1:1 to the traditional stocks they represent, entitling users to the same economic benefits. You can redeem them for the NGNT value of their underlying stock. 

How do I trade tokenized stocks on Buycoins?

You trade tokenized stocks the same way you trade other cryptocurrencies. However, unlike your crypto, you won’t be able to transfer your tokenized stocks to other wallets. You can only buy and sell. Use this as a guide for a better understanding of how this works.

What are some benefits of tokenized stocks?

You can trade tokenized stocks 24/7: Unlike traditional stocks, there are no closing and opening windows to trade tokenized stocks. As such, the market is open every hour of the day to trade. The liquidity may vary at different times, but you can always buy/sell whenever you want.

More liquidity: Because you can trade 24/7, you can get value whenever you want, without obstructions.

Fractional ownership: You can buy just a ‘piece’ of stock instead of having to buy an entire stock. So you can still benefit from the economic performance of your favourite companies without having to buy an entire stock.

We can’t wait for you to try it out here.

Feel free to reach out to support@buycoins.africa if you have any questions or feedback

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