What it takes to Invest in Stock Exchange
Investing in stock exchange means that you purchase bonds and shares from a given company with the aim of becoming a share holder in that company.
When you buy bonds and shares, generally referred to as stock, it means you are buying a piece of any given company. Companies trade their shares because they need to raise money to run their daily operations. So, purchasing these shares from any company makes you an investor in that company.
The price of shares is determined through the Initial Public Offering (IPO).The IPO sets the prices of shares based on how much the company is estimated to be worth and how many shares are being issued by the company.
While investing in the stock market is one of the best ways to build wealth over time, a positive shift on your investment is not guaranteed. However, volatility is a much sure thing.
How much do you need to start investing?
The amount of fees required by online brokers differ depending on the broker. Typically, you will require Ksh. 1,200 to open a Central Depository Account (CDS) account and Ksh. 100 payable on monthly basis to keep your account active.
On a minimum scale, you will be required to purchase at least 100 shares to be officially recognized as a shareholder. You can invest as little as Ksh. 5,000 depending on the company you want to buy shares from. Different companies trade their shares at different prices at the Nairobi securities exchange . Share prices could range from as high as Ksh. 400 per share to as low as Ksh. 1.
What is an SDC account?
Before you start investing in the stock exchange market, you will need an SDC account as one of the mandatory requirements.
An SDC account facilitates a smooth clearing and settlement services in the Kenya Capital markets. The account ensures a secure central custody, simplified, swift and safe transfer of your value as an investor. An SDC account stores all the shares you own.
Tips on how to invest in the stock market
Make informed decisions
Before you put your money in the stock market, you need to conduct a proper research of the market. It is not advisable to invest in the stock exchange market based on the name of the company or the industry they belong to.
Find an online broker
Opening an account with a licensed broker is one of the mandatory requirement before you invest in the stock exchange market.
Be sure to choose a broker who offers online trading platforms. His is important because online trading gives you the freedom to buy and sell your shares whenever and wherever you want.
Some of the current stockbrokers that offer online trading include:
-Faida investment bank
-Dyer & Blair
-Suntra investment bank
The documentation you need
You will be required to provide the following documents when opening an account with any stockbroker:
-A signed SDC-1 form
-National ID or passport
-Two colour passport size photos
-A copy of a recent utility bill
-Copy of your pin certificate
-First page of your bank statement
Invest in a business you understand
In order to make the best out of your investment, never invest in the stock. Instead, invest in a business, one you understand. It is important to know what business the company you intend to invest in is into.
Monitor your Investment
Any event that occurs both locally and globally has an impact on local financial market. It is therefore important to monitor your investment and keep offering the desired changes in it.
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