Are you Looking to Buy Shares in Kenya? Here we take you through the process of buying shares in Kenya.
Investing in shares is one of the best ways to build wealth and diversify your financial portfolio in Kenya. In 2024, the Nairobi Securities Exchange (NSE) offers opportunities for both beginner and seasoned investors, with companies like Safaricom and Kenya Power and Lighting Company (KPLC) being popular picks due to their prominence in the Kenyan market. This guide will take you through the process of buying shares in Kenya, focusing on how you can invest in Safaricom and KPLC.
Why Invest in Shares?
Before diving into the process of buying shares, it’s essential to understand the benefits of investing in the stock market. Shares, or stocks, represent a portion of ownership in a company. When you buy shares, you essentially own part of that company and stand to gain from its profits through dividends or capital appreciation. Additionally, holding shares can give you a say in company decisions through voting rights during annual general meetings.
Key Benefits of Investing in Shares:
- Potential for Long-term Growth: Stocks typically offer higher returns over the long term compared to other forms of investments.
- Dividends: Many companies pay out dividends, a portion of their profits, to shareholders, providing a source of passive income.
- Ownership: Owning shares gives you partial ownership in some of Kenya’s largest companies.
- Liquidity: Shares are easy to buy and sell on the NSE, making them a relatively liquid investment.
Now that we understand why investing in shares can be a good decision, let’s look at how you can buy shares, particularly in Safaricom and KPLC, two of the most popular stocks in Kenya.
Steps to Buy Shares in Kenya
To buy shares in Kenya, including Safaricom and KPLC, follow these steps:
1. Open a CDS Account
A Central Depository and Settlement (CDS) account is a prerequisite for buying shares in Kenya. A CDS account acts as an electronic account that holds your shares once you purchase them. You can open a CDS account through an authorized stockbroker or investment bank in Kenya.
Steps to Open a CDS Account:
- Visit a licensed stockbroker or an investment bank in Kenya, such as Standard Investment Bank, Equity Investment Bank, or Faida Investment Bank.
- Fill out the CDS account application form. You’ll need your ID or passport, a passport-size photo, and your KRA PIN.
- Submit the required documents and wait for the CDS account to be activated. Once activated, you’ll be ready to start buying shares.
2. Fund Your CDS Account
After opening a CDS account, you’ll need to deposit funds to purchase shares. The amount you deposit depends on the number of shares you wish to buy. For instance, Safaricom shares are among the most affordable blue-chip stocks on the NSE, and KPLC shares are also priced attractively for first-time investors.
You can fund your account via:
- Bank transfers through your stockbroker.
- Mobile money services, such as M-Pesa, depending on the stockbroker’s payment options.
3. Choose the Shares to Buy
Once your CDS account is funded, the next step is to decide which shares to buy. Safaricom and KPLC are among the top picks for many investors due to their market performance and long-term growth prospects.
How to Buy Safaricom Shares
Safaricom is one of Kenya’s leading telecommunications companies, and its stock has consistently been a top performer on the NSE.
- How to Buy Safaricom Shares: To buy Safaricom shares, you can instruct your stockbroker to place an order through their online trading platform or via a phone call.
- Why Invest in Safaricom: Safaricom is a blue-chip company with significant market share in the telecommunications sector. It has strong revenue streams from services like M-Pesa, mobile data, and voice calls.
How to Buy KPLC Shares
KPLC is the leading electricity distributor in Kenya, and its shares are a common choice for investors seeking long-term growth in the energy sector.
- How to Buy KPLC Shares: Similar to Safaricom, you can place an order for KPLC shares through your stockbroker’s platform or by making a call to their office.
- Why Invest in KPLC: KPLC is a key player in Kenya’s electricity sector, which is expected to grow as the country continues to industrialize and electrify rural areas.
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4. Place a Buy Order
Once you’ve chosen the shares to buy, it’s time to place an order with your stockbroker. You can do this through:
- Online Trading Platforms: Many stockbrokers in Kenya offer online platforms where you can buy and sell shares. Examples include the Faida Trader platform and EQUITY Bank’s EazzyApp.
- Phone or In-person: You can also call your stockbroker or visit their office to place a buy order.
Specify the number of shares you wish to buy and the price you’re willing to pay. Your stockbroker will place the order on your behalf, and once it is executed, the shares will be transferred to your CDS account.
5. Monitor Your Investment
After purchasing shares, it’s important to monitor the performance of your investments regularly. Keep an eye on the NSE and check company reports to stay informed about your stocks’ performance. Many stockbrokers offer platforms that allow you to track the value of your shares in real time.
6. Reinvest Dividends or Sell
If the company whose shares you own declares dividends, you can choose to reinvest the earnings by purchasing more shares. Alternatively, you can opt to sell your shares when they appreciate in value or if you need liquidity.
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Key Companies to Watch on the NSE in 2024
Aside from Safaricom and KPLC, several other companies on the NSE offer attractive investment opportunities in 2024. These include:
- Equity Bank: A leading financial institution with strong growth prospects.
- Co-operative Bank: Another top performer in Kenya’s banking sector.
- Bamburi Cement: A top player in Kenya’s construction sector.
- East African Breweries Limited (EABL): A leader in the beverage industry.
Final Thoughts
Buying shares in Kenya, particularly in companies like Safaricom and KPLC, is a smart investment strategy for 2024. The process of purchasing shares is relatively straightforward, starting with opening a CDS account, funding it, choosing your shares, and placing an order. With the right approach and a long-term investment mindset, you can grow your wealth and potentially benefit from dividends and capital appreciation.
Now that you know how to buy shares in Kenya, why not start your investment journey today?