How to Get Started With Nairobi Securities Exchange (NSE)- How to Buy and invest in shares
Nairobi Securities Exchange NSE provides opportunities for individuals and organizations to buy and sell shares and participate in online trading.
One can comfortably trade on the NSE stock from anywhere in the world. Buying and selling of shares on the Nairobi Securities exchange highly depends on the ever fluctuating share prices. It is therefore a wise idea for a potential investor to study the trends of share performance of a particular share before cashing out your money.
Stability of the Kenyan economy, interest rates in the banking sectors and company history are some of the parameters one should highly factor in as great entry point for exceptional long-term returns when investing in Nairobi stock exchange.
Now that you want to invest in the Nairobi Securities Exchange (NSE), where do you go to or who do you begin from?
The first thing you need to do is identify a suitable company to buy shares from
How to Identify a suitable company to invest in
Here are some factors to look for when choosing a company you want to invest in.
- Company size and its market capitalization
- Company revenue, profits and margin trends
- Company management and share ownership
- Rival company within the same industry
- Firm’s balance sheet as compared to its competitors
- Company share value and its history
- Debt status of the company
- Stock options and likelihood of dissolution
- Overall level of assets and liabilities
- Amount of long term debts
- Price-earnings ratio in comparison with its Price-to-book ratio
- Price-to-sale revenue ratio
Check on your Finances
Now that you have identified and settled on a suitable company, its tine to evaluate how much shares you are willing to buy. This will depend on the value of the company’s share and the amount of shares you are planning to buy. For instant if you intent to buy 1000 shares from Sasini which is currently trading at Ksh.18 per share, then you will have to Spend Ksh.18,000 to be able to invest.
You will also have to factor in the cost of opening a CDS account
Find a broker and open a CDS account
Before you can start putting your money to work on the NSE, you must first open a CDS account with a licensed stockbroker. A Central Depository System (CDS) account is an electronic online account that stores all of the shares you own.
Once a broker has granted you a CDS account, you will be issued with login credentials to help you log in and trade wherever you are.
Most of the stock brokers in Kenya permits direct Mpesa deposits at specified banks
So, how much does it cost to open a CDS account in Kenya?
The amount of these fees varies from broker but is typically about Ksh1,200.00 to open the account and Ksh100.00 per month to keep your account active.
There is no minimum amount required to fund your account, but when you decide to purchase a stock, you must buy at least 100 shares.
In addition to the account maintenance fee, your stockbroker will charge commission and fees on every trade you execute. The commission rate is the same across all stockbrokers and is equal to:
- 2.1% of the total value of transactions less than KES 100,000, and
- 1.85% of the total value of transactions more than KES 100,000.
To be able to open a Central Depository System-CDS account, you will need to find stoke broker. Here is a list of some of the registered Brokers in Kenya you can open a CDS account with.
List of Brokers in Kenya
- AIB Capital – site
- NIC Securities
- Dyer & Blair –site
- Sterling Capital Limited
- Faida Investment Bank –site
- Genghis Capital –site
- Kingdom Securities –site
- Equity Investment Bank
- NIC Securities –site
- SBG Securities site
- Suntra Investment Bank –site
READ: List Of best brokers for online trading in Kenya
There are more than 20 brokers trading on the Nairobi Securities NSE one can choose from. Some of these brokers offer online trading platforms that gives you an option to buy and sell shares in real-time.
However, there are various requirements one must meet and documents one must have before you can be able to open a CDS account with a broker and start trading.
READ:How you can easily move from a job security to financial freedom.
Documents required by stockbrokers to open a CDS account
- Two colored passport photos,
- A copy of your ID card or passport
- A duly filled CDS 1 form
- Other brokers may as for KRA PIN Certificate
- Bank statement or a copy of a recent utility bill
That’s it, you will be good to start your journey on the NSE by following these simple steps.
With everything in place, you will be able to receive dividends via direct deposit into your specific account. You can also receive your dividends via cheque.