Many potential share investors are intimidated by the prospects of buying shares on the Nairobi Securities Exchange (NSE). This is mainly because they do not understand the process involved with buying/selling shares, and how the market works. Others still believe that share investment is an activity only reserved for sophisticated investors. However, this has changed significantly in recent years. With developments in technology, more prospective investors can enter the market and there are many regulated and reputable stockbrokers that accommodate Kenyan investors, even if they do not have prior experience in buying, selling, or trading shares.
How To Buy Shares In Kenya
Research the Shares you want to buy
Before you start buying shares, you must do your research.
This means finding out as much as possible about the company and the shares you’re interested in.
You can do this by reading their annual reports, looking at financial news websites, and speaking to other investors.
There are approximately sixty-three (63) companies listed on the Nairobi Securities Exchange (NSE), spanning various sectors of the economy.
Some companies have been operating for over fifty (50) years, while others are pretty new. The NSE 20 Share Index comprises the top 20 companies in market capitalization.
This index is used to measure market performance and is a good starting point if you’re new to investing.
Decide how many Shares you want to buy.
Once you’ve decided which shares you want to buy, you need to determine how many shares you wish to purchase.
This will depend on your investment goals and how much money you have to invest.
Starting small and gradually increasing your investment over time is essential if you’re a new investor.
Open a CDS Account
You must have a Central Depository System (CDS) account to buy shares in Kenya. This is an account that is used to hold your shares electronically.
You can open a CDS account by going to any stockbroker and filling out the necessary paperwork. You will need to provide identification documents such as your ID, passport, or KRA pin.
Choose a Stockbroker
A stockbroker is a licensed individual or firm that buys and sells shares on behalf of investors. When you’re ready to buy shares, you must choose a stockbroker.
There are many stockbrokers to choose from, and you should compare their fees before deciding. The NSE has a list of licensed stockbrokers on its website.
When it comes to choosing stockbrokers in Kenya, there are a few things you need to keep in mind. Here are some tips:
- Compare Fees: Stockbrokers charge different fees for their services, so it’s essential to compare them before deciding. Some brokers charge a commission, while others charge a fee per transaction.
- Check Licensing and Registration: Ensure the stockbroker is licensed and registered with the Capital Markets Authority (CMA).
- Reviews and References: It can be helpful to read reviews and references from other investors before deciding.
- Ease of Use: Choose a broker that is easy to use and has a friendly interface.
- Customer Service: It is crucial to choose a broker with good customer service in case you need help with anything.
Deposit Money into your CDS Account and Start Trading:
Once you’ve chosen a stockbroker, you must deposit money into your CDS account.
This can be done via bank transfer, debit card, or credit card. Once the funds have been deposited, you can start buying and selling shares. Regarding trading, there are two types of orders: market orders and limit orders.
A market order is an order to buy or sell shares at the current market price. n the other hand, a limit order is buying or selling shares at a specific price.
Pay for the Shares
Once you’ve placed your order, you must pay for the shares. The money will be taken from your CDS account if you’re buying shares.
The money will be deposited into your CDS account if you sell shares. It is important to remember that stock prices can go up or down, so you could lose money on your investment.
Monitor your Shares
Once you’ve bought shares, it is crucial to monitor them.
This means tracking the stock price and keeping up with any news that could impact the company. If the share price falls, you may want to sell your shares.
On the other hand, if the share price rises, you may want to hold onto your shares or buy more. Monitoring your shares can be done online via the stockbroker’s website or app.