Consult licensed fund manager on stocks to buy

I AM Alvaro Thuo, 22.

At the moment, I am at the university pursuing a course in media studies.

Being a first-time investor, I would like to know what is required in order for one to buy shares at the stock market.

What is the minimum amount one can spend at the bourse?

What are the requirements for opening a CDS account? How do I trade my shares?

I am planning to buy my first stock in August and keep on buying and selling every month.

I have Sh20,000 to invest in shares.

Thank you.

DRIVING a car can be risky, but for most of us, the benefit of being able to get from point A to B conveniently makes it worthwhile.

It is the same with investing, but the beauty of it is that you can choose the level of risk you are comfortable with.

It is, therefore, critical to get a good understanding of the investment itself, what will affect its performance, and the level of risk involved.

The first thing you need to do before you invest in shares is to carry out research on the companies that you want to inject your savings into.

After that, identify a stockbroker or investment bank to provide you with a professional opinion of the companies you have identified and are keen on purchasing a stake in.

Next, you need to open a Central Depository System (CDS) account with the help of the identified stockbroker or investment bank.

You will be required to complete and sign a securities account opening-cum-maintenance form known as CDS 1 and attach a recent passport-size photograph, a certified copy of your driver’s licence, a copy of your passport or national identity card, as well as a certified copy of a tax return or utility bill.

You will then be issued with a CDS account number together with a duplicate copy of the account opening form for your records.

Stocks are normally invested in minimum lots of 100 shares.

The fee for trades below Sh100,000 is capped at 2.1 per cent and 1.85 per cent for amounts above this limit.

Your shares will be traded through a stockbroker/investment bank.

You can instruct the stockbroker to buy or sell the shares at your preferred price, subject to the prevailing market conditions.

In conclusion, it is important to consult a licensed stockbroker-cum-investment bank, investment adviser, and/or fund manager when one is in doubt about where to invest as these institutions have the requisite professional expertise and experience, which you should take advantage of.

We take this opportunity to wish you success as you build a portfolio of stocks.