What It Takes To Invest In The Stock Market In Kenya

Stocks investment have never gone out of style ,as long as big companies are always operating then there will be always be stock markets opportunities.

The list of Billionaires who have acquired wealth from stock markets is enormous both locally and internationally including the current US President Donald Trump.

Locally big names always come up whenever you mention stock investment;Centum Holdings Director Chris Kirubi,Equity Bank Chairman Peter Munga just to mention a few.

So what are stocks?

When you buy a stock, you’re buying a piece of the company. When a company needs to raise money, it issues shares.

This is done through Initial Public Offering (IPO), in which the price of shares is set based how much the company is estimated to be worth, and how many shares are being issued.

The company gets to keep the money raised to grow its business, while the shares (also called stocks) continue to trade on an exchange, such as the Nairobi Securities Exchange.

How much do you need to start?

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 it active.so to invest in shares you could start with as little as Kshs 5000 depending on the company you want to buy shares from,at a minimum of 100 shares you are officially a share holder!

Just like any other form of investments, stocks has its up and down and that’s why before buying shares you need to get advice from stocks expert who can guide you on sectors that are potentially profitable.

However, there are few tips that you should know before you get into this form of investments.

1. Take informed decision

Proper research should always be undertaken before investing in stocks. But that is rarely done. Investors generally go by the name of a company or the industry they belong to.

This is, however, not the right way of putting one’s money into the stock market.

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2. Avoid Mass mentality

The typical buyer’s decision is usually heavily influenced by the actions of his acquaintances, neighbours or relatives. Thus, if everybody around is investing in a particular stock, the tendency for potential investors is to do the same. But this strategy is bound to backfire in the long run.

3. Bull and Bear Markets

The opposite of a bull market is a bear market, which is characterized by falling prices and typically shrouded in pessimism.

The use of “bull” and “bear” to describe markets comes from the way the animals attack their opponents. A bull thrusts its horns up into the air, while a bear swipes its paws downward.

These actions are metaphors for the movement of a market. If the trend is up, it’s a bull market. If the trend is down, it’s a bear market.4

4. Always invest in a business you understand

Never invest in a stock. Invest in a business instead. And invest in a business you understand. In other words, before investing in a company, you should know what business the company is in.

5. Do not let emotions cloud your judgement

Many investors have been losing money in stock markets due to their inability to control emotions, particularly fear and greed. In a bull market, the lure of quick wealth is difficult to resist. Greed augments when investors hear stories of fabulous returns being made in the stock market in a short period of time.

This leads them to speculate, buy shares of unknown companies or create heavy positions in the futures segment without really understanding the risks involved,

Instead of creating wealth, these investors thus burn their fingers very badly the moment the sentiment in the market reverses.

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6. Have realistic expectations

There’s nothing wrong with hoping for the ‘best’ from your investments, but you could be heading for trouble if your financial goals are based on unrealistic assumptions.

However, it doesn’t mean that you should always expect the same kind of return from the stock markets.

7. Monitor rigorously

We are living in a global village. Any important event happening in any part of the world has an impact on our financial markets. Hence we need to constantly monitor our portfolio and keep affecting the desired changes in it.

If you can’t review your portfolio due to time constraint or lack of knowledge, then you should take the help of a good financial planner or someone who is capable of doing that. If you can’t even do that, then stock investing is not for you.

What questions or comments do you have on stocks investments?

Victor is a content writer at Career Point Kenya contact him victor@careerpointkenya.co.k