One of the best ways to make money in Kenya in the long term is investing in shares. The Muguku family is proof enough that the stock market can make you rich- if you know how to play your cards.
This article will show you how to buy shares in Kenya.
How to buy shares in Kenya: The preliminaries
The stock market continues to shun out millionaires and you also have an opportunity to join this exclusive club.
It’s not a small feat but you can become a star stock exchange investor on your own right, so long as you master the market.
So, how do you buy stock in Kenya.
How to buy shares in Kenya: in summary
- Open a CDS account– it’s free from any stock broker or investment bank.
- Decide the stock to buy- some choose.
- Choose the number of shares to buy.
- Complete the trade.
It’s also important that you learn how to sell shares in Kenya since there’ll be plenty of profitable cashing out opportunities along the way.
Read on to learn the precise actions.
How to buy shares in Kenya: detailed guidelines
It all starts with you opening a CDS account.
But what is a CDS account?
Well, a CDS account is nothing but a virtual account (It’s almost like a bank account) where you shares will be stored.
That’s because you no longer get a share certificate when you buy stocks in Kenya like in the past.
Instead, all your stocks are sent here so it’s the only evidence that you own stocks in certain companies.
Lucky enough, opening a CDS account is straightforward and takes minutes.
Here are the steps….
How to open a CDS account in Kenya
You visit any investment bank like Stanbic, stockbroker in Kenya, or a bank- some, like Equity act as agents of various stock brokers in Kenya as licensed by the CMA (capital markets authority).
You won’t pay a penny but you’ll be asked for the following documents:
- Your original ID card and a copy thereof.
- Your original KRA Pin and a copy.
- 2 recent colored passport size photos
Companies are asked for additional documents including a certificate of incorporation and company’s KRA PIN.
You can deposit some money in the CDS account via the broker or bank as you gear up for your first foray in the stock market.
Next, you’ll need to identify the best shares to buy in Kenya as I explain below.
How to identify the best shares to buy in kenya
There’s no magical method to use to pinpoint the perfect stock and brilliant stocks are in abundance out there.
All you need to do to land yourself a potential gem is little amount of research and some soberness (Never, ever make investment decisions based on emotions).
Apply these tips in your quest to identify the best shares to buy in NSE Kenya (Nairobi Stock Exchange).
- Research your prospective company’s general health: If you want to invest, let’s say in Safaricom, look for its annual report first. This will give you an overview of the company’s future prospects- you want to buy shares of a stable, growing company.
- Evaluate the business further: Hunt for any useful information in the newspapers, the internet, TV, etc. about the company’s shares. Also look for the latest Nairobi stock exchange performance data of the share from the NSE online platform. You want to be sure that the company’s share has great potential going forward.
You can also consult an experienced investor or your broker for advice on the best companies to buy shares in Kenya even as you analyze the company’s competition, cash flows, debt levels, and strategic plan.
Do this for every share you have in mind and settle on the most promising one.
You now need to work out how many shares to buy and a few other particulars.
Can we now tackle these?
How to buy shares in Kenya: How many shares should you open with?
With shares, you don’t have to dole out thousands of shillings at once.
In fact, many of the tremendously successful investors in Kenya- You must have heard of Chris Kirubi-started small and grew gradually.
This is the most strategic way of learning the ropes.
Having said that, the least number of stocks you can purchase is 100 so you require adequate funds depending on the share you want to mark your entry with.
This may not be much in some cases. For example, if the share you’re buying is trading at shs 5.00, you’ll just need shs.500.00!
You may, of course, need higher amounts if you go for shares with higher worth like the Nation Media group or EABL shares.
Either way, start small.
You’re now ready to buy.
- Visit your broker once more and make a written request to him to purchase the share you want- Don’t type anything, he/she will give you a form to fill. It’s much easier if your broker has an online trading platform since you just order online.
- Deposit more cash if needed (or if you hadn’t done that).
He will execute the order and the shares you have purchased will be reflecting in your CDS account after a day or two.
By the way, you deserve hearty congratulations….
See, you’re part of a brave new investment world and you’ll be rubbing shoulders with some of Kenya’s top billionaires including Peter Munga, Equity Group’s founding director- he has made the bulk of his wealth from the NSE.
How to sell shares in Kenya
Some have asked me to write about how to sell Safaricom shares.
Well, the process of selling shares in Kenya is the same- it doesn’t matter the type of share you own.
Selling is perhaps the simplest- just visit your broker/bank and again fill a form requesting the sale (or complete the sale application order online where applicable).
Your money will be landing in your account in a day or two.
That said, you should know that the best way to make money from shares is by being in it for the long haul because over time, the average share price is typically less volatile.
Indeed, most of the savvy stock investors buy and forget the shares for years (unless they want to abandon an underperforming share).
Note that you can’t currently sell newly acquired shares until after three days after purchase- even if the prices soar to dizzying levels- due to a stock market rule known as T+3.
You must also note that buy/sell transactions are not free meaning that the amount you receive in your bank account will be less the transaction fees.
For the most part, the fee is modest.
How to buy shares in Kenya : Can you buy shares without a broker?
Yes, today you can buy your favorite share without seeking advice from a stock broker and save the applicable fee.
But it’s always wise to buy/sell in consultation with your licensed stockbroker when new-he/she can be especially handy when selecting the share to first buy to avoid burning your fingers.
You can, nonetheless, make money as an independent investor if you’re good in research and you have learnt how to interpret daily movements in the NSE.
Bonus tips to help you buy shares and thrive in the NSE
- Start now. Somebody who purchased 1000 shares worth shs.5.00 yesterday is on course to earn returns if the share price rises to shs.11 by the end of trading today.
- Trade for the long-term. That will help you remain steadfast even during crazy price downturns.
- Consider diversifying with time. There’s a good reason why millionaire investors buy shares in different businesses.
- Don’t let mistakes put paid to your dreams. Rather, learn your lessons and use them to become a wiser investor.
- To build wealth, shun the herd mentality, practice risk management, and manage your emotions.
The NSE is still a profitable investment vehicle in Kenya and it can win you the financial breakthrough you crave for.
But you must learn the ropes and act soberly.
You now know how to buy shares of Safaricom in Kenya or any other company for that matter so the process should be exciting and rewarding.
Good luck and happy investing.
Please drop your questions about how to buy shares in Kenya in the comments section..we shall be happy to guide you.