10 Myths About Investing in Nigerian Stocks
The truth? A lot of these ideas are myths — half-truths passed around in bars, offices, and even family gatherings. If you’ve ever been curious about investing in Nigerian stocks but hesitated because of what you’ve heard, this post is for you.
Let’s bust the top 10 myths about investing in Nigerian stocks one by one.
Myth 1: “The Stock Market Is Just Gambling”
Walk into any Nigerian barbershop or buka and bring up “stocks” — nine out of ten people will tell you, “Abeg, na the same thing as betting. Na pure gamble.”
This thinking is very common because the stock market feels unpredictable. Prices rise and fall daily, and sometimes without clear explanation to the average person. But calling it gambling is like saying farming is gambling because rain may or may not fall. Both involve uncertainty, but the principles are different.
Gambling vs. Stock Market: The Big Difference
Gambling is based on chance. The outcome of rolling dice, spinning a slot machine, or predicting a football score is pure probability. No matter how smart you are, the system is designed so the house usually wins.
Stock investing is based on ownership. When you buy a share in GTCO, Dangote Cement, or MTN Nigeria, you own a real slice of that business. Your returns come from:
Dividends (share of company profits).
Capital gains (when the share price goes up as the business grows).
That’s why investors like Warren Buffett or Aliko Dangote didn’t build wealth by betting on roulette wheels. They studied businesses, invested, and grew over time.
Why Nigerians Confuse the Two
There are several reasons why this myth persists:
Short-Term Mentality: Many Nigerians enter the stock market expecting instant riches. When that doesn’t happen, they conclude it’s “gambling.” But stocks work best over the long term. If you invest in Nestlé Nigeria and hold for 10 years, you’ll likely see significant growth.
Historical Scars: The 2008 Nigerian stock market crash left deep wounds. People watched their portfolios crash by over 60%, and many never recovered. For them, it felt no different from losing a bet. But in reality, it was partly due to margin lending abuse by banks and poor regulation, not random chance.
Cultural Preference for Tangible Assets: Nigerians love land, gold, or physical businesses because you can see and touch them. Stocks are abstract, so they feel riskier, like gambling slips.
The Role of Information
Another reason people view stocks as gambling is poor financial literacy. If you don’t understand how companies make profits, what dividends are, or how inflation affects businesses, then yes — buying stocks looks like tossing money at a spinning wheel.
But informed investors know how to:
Read financial statements.
Check dividend histories.
Study industry trends (banking, telecoms, energy).
For instance, when you see MTN Nigeria growing subscriber numbers and expanding into fintech, buying its stock becomes an educated decision, not a gamble.
👉 Read: Why Many Nigerians Think the Stock Market Is a Gamble.
Stocks Have Rules, Gambling Doesn’t
Think about it:
The Nigerian Exchange (NGX) has regulations, disclosures, and audited reports.
Gambling centers on luck, with no transparency.
Yes, some shady practices exist in the Nigerian market, but they don’t erase the fact that it’s a structured environment where businesses compete, grow, and share profits.
Real-World Example
If you bought ₦100,000 worth of Dangote Cement shares in 2010 and held until today, you’d be sitting on millions in value plus steady dividends along the way.
Now compare that to betting ₦100,000 on a football accumulator in 2010 — that slip is long gone. That’s the difference between gambling and investing.
The Bottom Line
Calling the Nigerian stock market gambling is more about mistrust and lack of knowledge than reality. Stocks are not bets; they’re investments in businesses that employ people, pay taxes, and grow the economy.
The difference is time horizon and knowledge:
Short-term guesswork = feels like gambling.
Long-term informed investing = wealth building.
Myth 2: “You Need Millions to Start”
If you ask an average Nigerian about buying shares, many will say:
“Na rich man investment. Me wey never get one plot of land, how I wan buy stock?”
This myth comes from the old days when stockbrokers required big deposits, paperwork was tedious, and investing in the stock market felt like something only corporate executives, bankers, and politicians could do. But today, things have changed dramatically.
The Old Reality
Back in the 1990s and early 2000s, stock investing in Nigeria was indeed a bit elitist.
You needed to walk into a brokerage office.
Fill out long forms manually.
Deposit sizeable sums (often ₦100,000 or more).
Wait weeks before seeing your CSCS account activated.
Naturally, ordinary Nigerians felt locked out. Stocks seemed like a “high-table” affair, reserved for Lagos businessmen in suits.
The New Reality
Thanks to technology and reforms in the Nigerian Exchange (NGX), the barriers have dropped. Now:
You can start with as little as ₦5,000 or ₦10,000.
Online platforms like Trove, Bamboo, Chaka, and RiseVest allow you to buy local and foreign stocks directly from your phone.
CSCS (Central Securities Clearing System) has been digitized, making account opening much faster.
Banks like GTCO, Access Bank, and UBA also provide retail brokerage services.
👉 See: How to open stock trading account in Nigeria from phone.
Small Investments Compound Over Time
Let’s break the myth with a real-life example:
If you invest ₦10,000 every month into dividend-paying stocks like Zenith Bank or Seplat Energy, that’s ₦120,000 per year.
Over 10 years, that’s ₦1.2 million invested.
Add dividend reinvestments + capital gains, and you could easily grow that to ₦2 million–₦3 million depending on the market.
That’s how small, consistent investing beats “waiting to gather millions first.”
Why This Myth Persists
Status Symbol Mentality: Nigerians like to associate investing with “big men.” If you don’t roll in with ₦1 million cash, people assume you’re not a “serious investor.”
Lack of Awareness: Many people don’t know minimum entry levels are now very low.
Cultural Bias Toward Land & Property: Nigerians prefer saving until they can buy a piece of land (often ₦1 million+). Stocks don’t seem tangible enough to start with “small small money.”
Why Starting Small Actually Works Better
Learning Curve: Starting with ₦5,000 lets you test the waters without fear. You can practice buying, selling, and reading market reports.
Reduced Risk: You won’t panic if things dip because your exposure is low.
Habit Building: Regular small investments build discipline — the real secret to long-term wealth.
This is similar to how people do ajo (thrift contributions) — it’s about consistency, not size.
Real-Life Stories
Chinedu, 26 years old: Started with ₦7,500 on Bamboo in 2021. By 2024, after consistently adding little amounts, his portfolio grew to ₦750,000. He admits: “If I waited till I had millions, I for still dey wait.”
Ngozi, a civil servant: Began buying Zenith Bank shares in 2010 with just ₦15,000. Today, her portfolio plus reinvested dividends is worth over ₦1.2 million.
Both examples prove that “little drops of water make a mighty ocean.”
The Bottom Line
You don’t need to be Dangote to invest in Nigerian stocks. In fact, waiting until you have millions is often an excuse that delays wealth building.
The truth is:
Start with what you have.
Be consistent.
Reinvest dividends.
Watch compounding do its magic.
Next time someone says you need millions to start, remind them: “Oyinbo people dey call am compound interest. We sef fit chop from am small small.”
Myth 3: “Foreign Stocks Are Always Better”
If you listen to many Nigerians today, they’ll tell you:
“Abeg, forget Naija stocks. Put your money in Apple, Tesla, or Amazon. Nigerian companies no fit pay.”
On the surface, this argument looks convincing. U.S. tech companies are global giants. They dominate headlines, and their share prices sometimes grow at lightning speed. But here’s the thing: foreign doesn’t always mean better.
The Appeal of Foreign Stocks
It’s easy to see why Nigerians love foreign stocks:
Global Brand Recognition: Everyone uses Facebook, Apple, or Netflix. Owning a piece of them feels cool.
Stable Economies: The U.S. stock market is older, more transparent, and less politically chaotic compared to Nigeria’s.
Dollar Advantage: With the naira depreciating, earning returns in USD feels safer.
So yes, foreign stocks have strong appeal. But assuming they are “always better” ignores key realities.
Nigerian Blue-Chips vs. Foreign Tech Giants
Let’s compare apples to oranges — literally:
Apple Inc.: Between 2010 and 2020, Apple’s share price skyrocketed over 900%. That’s amazing growth.
Dangote Cement (Nigeria): Between 2010 and 2020, Dangote Cement also delivered huge returns to local investors — plus consistent dividends.
Here’s the kicker: while Apple was giving global investors returns in dollars, Dangote Cement and GTCO were giving Nigerians naira-based returns that beat inflation and even fixed deposits.
And then comes MTN Nigeria’s IPO in 2019. Many Nigerians who bought at listing saw their investment double within a few years — something most foreign investors could only dream about during the same period.
👉 Related: How MTN Nigeria’s IPO changed investor culture.
Dividends: Nigeria’s Secret Weapon
One big difference is dividends.
U.S. tech stocks like Tesla and Amazon rarely pay dividends — they reinvest profits into growth.
Nigerian companies like Zenith Bank, Seplat, and Nigerian Breweries consistently pay dividends, sometimes yielding over 10–12% annually.
For Nigerian investors who need steady cash flow (students, retirees, side hustlers), local dividend stocks can be far more rewarding than foreign ones.
👉 See: Why many Nigerian traders don’t understand dividend yields.
Accessibility and Costs
Foreign stocks aren’t free of challenges:
You often need dollar accounts or fintech apps to access them.
Brokerage fees, FX conversion rates, and minimum requirements can eat into returns.
With naira volatility, your gains can be wiped out by currency depreciation if not managed carefully.
By contrast, buying local stocks is cheaper, easier, and settles directly in naira.
Why the Myth Persists
The “Abroad is Better” Mentality: Many Nigerians automatically assume anything foreign is superior. Stocks are no exception.
Media Hype: Tech stocks dominate global headlines — every Nigerian youth knows Elon Musk’s Tesla, but how many know Seplat or Lafarge?
Currency Depreciation: With the naira falling, investors prefer dollar assets for stability, giving the impression that foreign stocks must be safer.
Balanced Investing Is the Key
The truth is, it doesn’t have to be “either-or.” Smart investors diversify:
Keep some money in Nigerian blue-chip stocks to take advantage of dividends and local growth.
Hold some U.S. or global stocks for dollar protection and exposure to global innovation.
Think of it like a diet: eating only jollof rice or only pizza gets boring. A mix keeps you strong.
Real-Life Example
Emeka, a Nigerian investor: Put ₦500,000 into Zenith Bank in 2015. By 2025, with reinvested dividends, his portfolio grew to over ₦2 million.
Same Emeka: Also bought $1,000 of Tesla shares in 2015. By 2025, it grew massively in dollar terms — but when he converted back to naira, part of the gain was swallowed by FX rates.
Moral of the story? Both markets have strengths. It’s not about “better” but about balance and goals.
The Bottom Line
Foreign stocks are attractive, no doubt. But Nigerian stocks are not useless or inferior. In fact, for everyday Nigerians, local blue-chips may deliver better, more reliable returns — especially through dividends.
The myth that foreign stocks are always better ignores:
The power of dividends.
The growth of Nigerian giants like MTN and Dangote.
The benefits of investing in your home currency.
The real winners are those who play both sides smartly.
👉 Also read: Comparing Nigerian stocks to Forex.
Myth 4: “All Nigerian Stocks Are Risky”
If you stop a random Nigerian and ask about the stock market, chances are they’ll say:
“Abeg, all those companies fit crash anytime. Na too risky!”
This is one of the biggest misconceptions about investing in Nigerian stocks. Yes, risk exists. But saying all Nigerian stocks are risky is like saying all food is unhealthy. It depends on what you eat — or in this case, what you invest in.
Understanding Risk in Context
Every investment comes with risk — even keeping cash under your pillow (risk of theft or inflation eating it away). The stock market is no different.
But here’s the truth: not all stocks are created equal. Some are extremely volatile, while others are relatively stable.
In Nigeria, the market has a spectrum:
Blue-chip stocks (more stable): GTCO, Zenith Bank, MTN Nigeria, Dangote Cement, Nestlé Nigeria.
Mid-cap stocks (moderate risk): Nigerian Breweries, Lafarge, Seplat Energy.
Penny stocks (high risk): Small, lesser-known companies trading below ₦1 or ₦2.
Why People Think All Stocks Are Risky
Memories of the 2008 Crash: The Nigerian stock market lost over 60% of its value during the 2008 global financial crisis. Many retail investors never recovered. For them, “stocks = danger.”
Ponzi Scheme Confusion: Scams like MMM and fake “investment clubs” have made people lump regulated stocks together with fraudulent schemes. Guide: How to identify scam stock investment.
Unstable Economy: Inflation, devaluation, and political instability make people believe the whole market is a gamble.
👉 Read: The effect of political instability on the Nigerian stock exchange.
Blue-Chip Stability vs. Penny Stock Risk
Let’s break it down:
Blue-Chip Example: Zenith Bank has paid dividends consistently for over a decade. Even during recessions, it rewarded shareholders. The price may dip, but long-term investors still profit.
Penny Stock Example: A little-known company trading at ₦0.20 may skyrocket to ₦0.50 (150% gain!) but can just as easily crash back to ₦0.10 overnight. That’s gambling territory.
So when someone says “all Nigerian stocks are risky,” they’re usually thinking about penny stocks or speculative plays — not blue-chip companies.
👉 See: Top 10 most traded stocks in Nigeria.
Types of Risks in Nigerian Stocks
To be clear, Nigerian stocks do carry risks — but they vary:
Market Risk: Prices fall due to overall economic downturns.
Political Risk: Policy changes, elections, and government instability can affect performance.
Currency Risk: Naira devaluation affects foreign investors especially.
Liquidity Risk: Some stocks trade so infrequently that selling them can be difficult.
👉 Learn more: Risks of investing in Nigerian stock.
How Smart Investors Manage Risk
Diversification: Don’t put all your money in one stock or one sector. Mix banks, telecoms, consumer goods, and energy.
Long-Term Holding: Short-term trading feels riskier. But over 5–10 years, Nigerian blue-chips usually outperform savings or fixed deposits.
Stick to Fundamentals: Invest in companies with strong balance sheets, consistent dividends, and proven track records.
Avoid “Noise”: Just because someone whispers about a “hot stock” doesn’t mean you should buy. Always research first.
Real-Life Example
Investor A: Put ₦500,000 into Zenith Bank in 2015. Today, including dividends, it has grown to over ₦1.5 million. Stable, rewarding.
Investor B: Put ₦500,000 into a penny stock in 2015. Today, it’s worth less than ₦100,000. That’s where the risk lies.
The difference? Choice.
The Bottom Line
Not all Nigerian stocks are risky. Some are indeed speculative and unstable, but many are reliable wealth builders if you stay long-term.
When people lump everything together, they miss opportunities like:
MTN Nigeria’s IPO boom.
Dangote Cement’s steady growth.
Zenith and GTCO’s dividend consistency.
The real lesson? Educate yourself, choose wisely, and think long-term. That way, Nigerian stocks become less like a gamble and more like a strategic investment.
👉 Also read: Comparing Nigerian banks stock.
Myth 5: “Dividends Are Just Pocket Change”
Many Nigerians underestimate the power of dividends. Yet companies like Zenith Bank and Seplat Energy pay strong dividend yields, sometimes higher than what savings accounts or fixed deposits give.
The problem is not dividends being small, but investors not holding long enough or reinvesting them.
👉 See: Why many Nigerian traders don’t understand dividend yields.
Myth 6: “Elections Kill the Market”
Elections cause uncertainty, yes. But that doesn’t mean the market dies. Historically, election years bring volatility, but also opportunities for long-term investors.
For example, stocks may drop when political tension rises, only to recover once stability returns. Savvy investors use such dips to buy strong companies at discounts.
👉 Read: How election years affect the Nigerian stock market.
Myth 7: “Stock Scams Are Everywhere”
It’s true that Ponzi schemes like MMM fooled millions, and some shady “investment clubs” still pop up. But those are not the stock market.
The Nigerian Exchange (NGX) is regulated, and listed companies undergo strict reporting. The real problem is people not knowing how to spot scams.
👉 Guide: How to identify scam stock investment.
Myth 8: “Nigerian Youths Don’t Care About Stocks”
Young Nigerians are often seen as obsessed with crypto, forex, or sports betting. But that’s changing fast. Platforms like Bamboo and Trove make stock investing as easy as downloading an app.
Still, there’s a cultural gap — many youths avoid stocks due to mistrust and poor financial education.
👉 See: Why many Nigerian youths avoid stock market.
Myth 9: “Only Banks and Big Men Control the Market”
While it’s true that institutional investors dominate large trades, retail investors (everyday people) are becoming more active. Diaspora Nigerians are also investing back home, adding diversity to the market.
👉 Must-read: How African diaspora Nigerians can invest back home through stocks.
Myth 10: “Inflation Makes Stocks Useless”
Nigeria’s high inflation eats into savings and returns, yes. But stocks are often a hedge against inflation. When inflation rises, companies increase prices, and strong firms pass this on to consumers — boosting revenue and protecting investors.
For instance, consumer goods firms like Dangote Sugar and Nestlé often perform well during inflationary cycles.
👉 Learn more: How inflation in Nigeria impacts stock market.
Final Thoughts
The Nigerian Stock Market is often misunderstood because of past crashes, poor financial literacy, and cultural bias. But when you look closely, most of the fears are built on myths.
No, it’s not gambling.
No, you don’t need millions.
And no, foreign stocks aren’t always better.
If you’re willing to learn, start small, and stay consistent, the Nigerian stock market can be one of the best wealth-building tools available today.
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