A beginner’s guide to investing in the Kenya Securities Market

April 12, 2021

Many of us invest time in doing the things that make us happy and invest our money in things that bring us joy. But few people invest in their future. The ongoing pandemic has shown us the importance of thinking of our futures. We can no longer be sure of what tomorrow brings but we can prepare ways of handling whatever we are handed with. Securities are a good way to grow your money for the future. The Kenya Securities market seems to be a mystery to invest in, but it is not. If you would like a beginner-friendly guide to investing in the Kenya Securities Market, then you have come to the right place;

What are securities?

Securities are financial instruments with monetary value that can be exchanged for a specified value. Securities can either be equity (shares in a company) or debt (money loaned to the government or a company). People with equity in a company(shareholders) do not receive regular repayments but are entitled to dividends after all creditors and bills have been paid. On the other hand, those lending to the government or companies generally receive regular payments of interest the money earned and the repayment of the principal. Securities that are open to the public are listed and traded via stock exchanges. Read more about securities.

Investing in the Kenyan Securities Market

The first step is planning out your investment journey. Setting financial goals will help you figure out how, when and where you will invest your money. You may choose to set an automatic cut from money in your bank account or choose to do it manually. Additionally, the amount could be a fixed percentage every month, or a varying one. Sticking to a budget will help track how and where you spend your money on. Read 10 budgeting hacks you need to know.

Define your investment objectives and goals

It is important to be clear with your investment objectives and goals so that you can formulate an effective strategy. For instance, if your goal is to grow your money you may choose to trade stocks. On the other hand, if you would simply like some cash stacked away, you may choose to go with government bonds.

Identify a stock brokerage firm – Kenya Securities Market

Stockbrokers assist people to purchase stocks and shares of a company. They are the middlemen between buyers and sellers of the stock of different companies. The brokers offer different services such as execution (buying or selling what you would like), discretionary (buying or selling with your permission) and advisory (you get advice and make the final decision). Moreover, the brokers provide insights from analyzing market trends that can help you grow your investment. See a list of stockbrokers. Alternatively, Image Registrars, located on Barclays Plaza in Nairobi CBD, is a company that provides company secretarial and share registration services. They provide stockbroker information as well as consultancy services. Nevertheless, it is important to do your own research before choosing to work or invest in a company.

Open a CDS account to trade in the Kenya Securities Market

CDS stands for Central Depository System. The stock brokerage firm you choose will help you set up an account. You will require your ID card, passport photo, kra pin and other documents. You will then need a trading account which the brokerage firm will also help you open. The trading account will cost you around 1200ksh initial fee plus 100ksh per month maintenance fee. (documents required and prices vary)

Develop interest and start investing

Once you have a trading account, you can start buying or selling shares with advice from your stockbrokers. In Kenya, you can buy a minimum of 100 shares. Make sure to do thorough research on the companies you would like to invest in before making a decision. You can get stock trading information from the Nairobi Stock Exchange website or the website of the firm you would like to invest in, business news on local tv stations and business daily newspaper.

Stay tuned for more next week.

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1 Comment

  • Reply Stocks Forex or Crypto, which one is the best option for you? - Nicky Saw April 26, 2021 at 4:17 pm

    […] A stock is a type of security indicating the holder has a portion of the company that issued it. Owning stocks is advantageous in the long term. They have proven to build up larger returns than cash and fixed-income investments. It is important to note that buying and selling prices fluctuate over time. Moreover, there are two types of stock; common stock and preferred stock, read below for the main differences. Please note that common stock is what most people refer to when they simply talk about stocks. Read a beginner’s guide to the Kenya stock markets. […]

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