Investment Objectives and Strategies of Individual Investors in the Nigerian Capital Market

Abstract

This paper analyzes the investment objectives of individual investors in Nigeria and the strategies which they use to achieve these objectives. The study relied exclusively on primary data obtained from a structured questionnaire. Among the various objectives pursued by them, the primary investment objective of retail investors in the Nigerian capital market is for security. This is followed by long-term price increase and short-term price increase, indicating that the average Nigerian investor is more likely to be a long-term investor even as he exhibits speculative tendencies from time to time. The study also reveals that investors prefer to invest in the shares of Deposit Money Banks followed by shares of companies in Food/Beverages/Tobacco, Petroleum marketing, Breweries and Building materials which apart from Petroleum marketing are in the manufacturing sector. Investors are more likely to obtain their shares from the primary market and more than a third of retail investors do not patronize the secondary market. This has given rise to the buy-hold attitude seen among Nigerian investors and this absence from secondary market activities has resulted in the relative low liquidity of the Nigerian stock market. For arriving at a decision on which stocks to invest in, investors rely on self-analysis of financial statements and occasionally on the recommendations of financial advisors and analysts. These findings will serve as a guide for capital market practitioners in designing appropriate portfolios for investors based on their preferences.

Keywords: Investment objectives, Investment strategies, Individual investors, Nigerian capital market