By Babajide Komolafe

You can make good money from investment in the stock market. But you can also lose money or in fact be defrauded. For those who choose to invest directly in the stock market, the following tips will reduce the risk of losing money.

Patronise Licensed Stockbrokers
There are many people and firms out there offering to help people buy stocks but they are not licensed by the Securities and Exchange Commission, SEC. A lot of them have ended up defrauding people.

To avoid being a victim, visit the website of SEC, go to the menu drop down, click on ‘For Investors.’ On the page, ‘For investors’ click the segment, ‘Find a Registered Operator.’

This will produce a page with a space to ‘search for capital market operators.’ Type into the space the word, stockbroker, it will present a list of licensed stockbroking firms. You can type into the search space the name of a specific stockbroker, and if the search does not produce the name, the firm is not a licensed stockbroker, don’t patronise it.

Don’t pay into the personal account of a stockbroker
A professional stockbroker will not ask you to pay into his/her account. Anyone who does so may defraud you, and many have been so defrauded. Always pay into the corporate account of the stockbroking firm. Also keep your payment receipt as and obtain receipt or any document of your transactions with your stockbroking firm.

Don’t invest money you cannot afford to lose
There is money that is very critical to your present life and future life as well as responsibilities. These include savings for rent, school fees, pension etc. It is not wise to invest such money in the stock market. This is because the up and down movements of share prices are very very unpredictable. They can happen anytime and when they happen, investors lose money. An example, on Tuesday November 11, 2025, the stock market lost N4.6 trillion. That is what some investors lost on a single day. Imagine, someone who had invested money for rent, and payment for the rent was due that week.

Don’t invest for the short term.
In the short term, anything can happen in the economy or to any company or even in the stock market that can negatively affect share prices. But in the long term, the shares of most companies, especially well managed ones, record price increases, which when combined with dividend payment, result in healthy returns for the investor. That is why those who invest for short term, less than two years, and especially if they invested money for critical needs, are highly exposed to the risk of losing money. (To be continued)