How to Buy Shares in Kenya (2020 Update)

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Today I am going to show you how to buy shares in Kenya.

Shares also known as stocks, according to the Nairobi Securities Exchange are a piece or pieces of ownership of a company or an enterprise. When you buy a share, you become an investor and thereby an owner of a piece of the company’s profit or losses.

When you buy a company’s shares, you assume such roles as, becoming a guarantor for borrowing loans from cooperative societies and banks.

It is also an easy way of saving your money for the future because once you buy the shares they continue growing and you stand a chance of earning more money.

How to buy shares in Kenya

Here is how to buy shares in Kenya in 2010

1. Have valid documents

In Kenya, while buying a tock or any financial assets, the following documents are required: A valid Kenyan ID or passport, your Address, source of income, and cheques for banks linking.

2. Identify a genuine brokerage firm

shares in Kenya can be bought in three main ways. Through a stockbroker, An online broker or an investment manager or financial adviser. A genuine brokerage firm should be listed by the NSE. Should also be willing to advise you on the uncertainties that come with buying shares the advantages and also advise you on best stock markets you can invest in.

3. Open a Central Deposit and Settlement account (CDS)

This account enables you to buy and sell shares or other securities at the NSE similar to a normal savings account. It can be opened directly through the Central Bank or authorized dealers like commercial banks and stockbrokers.

Depending on your preference, you can open an online account from the central bank portal or through and an individual broker. The minimum amount to buy a share normally is around Ksh1,200 per share and a monthly retainer of Ksh 100 to keep the account active.

However, the Ksh 100 retainer does not apply to brokerages, some are free some have a fee higher than that. You can buy as many shares as you want to depend on the amount and the returns you want.

4. Analyze available stocks before investing your money in one

Before starting your investment, it is always advisable to be cautious on who you invest with. Research the stock market, invest in attending investment talk shows or seminars this will help you make educative decisions on what to invest in and not through your assumptions about the company.

This research can be done in ways such as going through the company investment profile, the company’s literature, the company’s performance for the past periods and the company’s products. Doing due diligence for a company can take time but can help you determine the risks you want to take on, the returns and the products that meet your needs.

Some companies may have lower share prices because the returns are low-quality investigation helps you analyze such occurrences.

Read also: Investing in Kenya 2019

List of trading stockbrokers at the Nairobi Securities Exchange(NSE)

There are about 24 stockbrokers trading at the NSE currently. Some of these 24 stockbrokers have online platforms whereby an investor could log in and trade by themselves.

Some of these stockbrokers with online platforms include:

  1. Faida investment bank – this bank exists sorely to link investors to wealth creation avenues. It has both an online share trading account and equity training account which one could choose to subscribe to.
  2. AIB capital – this firm ensures that you have someone guiding you in the process of buying shares.
  3. NIC securities – The coolest thing about this online platform is that it also has an application which one can download and trade-in share through their mobile phone.
  4. SBG Securities – It’s owned by Stanbic bank and its been in the market for a while now. If you are at trading with an online platform that is secure, please try them out.
  5. Dyer & Blair – Among one of the oldest investment companies in the market. It has over 60 years in existence translating to better chances of getting the best advice from this platform.

Important points to note before buying shares

While buying shares can be a profitable source of income, this is a list of things to consider before buying shares.

Before buying shares, asses how much risk you want to take on, how much returns you expect and the investment products that interest you.

Have an objective or a driving goal that will make you committed to the investment plan and the results you foresee in the future with it.

Determine how long you are prepared to wait for a return on this investment. Learn to be patient when the shares fail to perform. Work on alternatives ways to rebuild yourself

Invest with money that you do not need in the short run and still be stable when you lose it. For example, disposable income besides your day to day financial needs.

Be optimistic of the outcome of the business, expect risks and profits in an equal measure because of the unpredictability of the business

Benefits of buying shares

Like any other investment, investing in shares is a source of profits and has several benefits. When a company you’ve invested in makes profit usually calculated after a period of six months part of the amount is retained to support the projects of the company while the rest of the amount given to the shareholders as profits normally referred to ass dividends.

The level of dividends is calculated according to the share price.

In most cases shares go up in price as accompany becomes more profitable, you can sell out the shares and earn a higher profit than your initial investment.

Read also: How to invest one million shillings in Kenya

Demerits of buying shares

However, investing in the stock market can be challenging especially with the rising and falling of shares. If a company at any point falls in value, the shares automatically fall. Especially when they announce profits warnings the chances of picking up fast are always very minimal hence you incur losses in the long run.

Another thing is, the government through the Capital Markets Authority controls the trading of shares. This regulation is set to protect stock buyers from dishonest practices and ensure transparency at all costs. Nevertheless, these share regulations, shareholders can only sell the stocks according to the market prices which might incur small profit margins.

 

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