We could be doing too much talking about saving and investing in shares but still be missing the point. Do you know the procedure to follow when getting into the stock market and start trading there? I suppose you have no idea at all, or even if you have an idea, it might be a blurred one.
Fear not and don’t feel intimidated, this article is specifically for you and many others out there who maybe curious just like you. But in this case, your curiosity don`t kill you, it gives you life – Financial Life.
This is how the journey begins: you make up your mind that you want to invest to get returns which will enable you achieve certain objectives. You then choose from among the many investment options you have and land on the stocks. What follows? That is where the problem now is, and the solution is just here below…just read on…
Once you have made up your mind that you want to invest in shares, the first thing to do is to identify a good stock broker who will be investing on your behalf. Commission charges by all stock brokers in Kenya are the same; thus when choosing one from amongst the many, you could only differentiate them by the quality of their service delivery.
You then move on to open a Central Depository System (CDS) account from which you shall be trading your shares. A CDS account is simply an electronic account that holds shares only. This account is managed by a corporation which acts as an electronic bank for shares.
The corporation provides all services related to trading in shares; just like a normal bank would hold your money and provide services relevant to all your transactions with your money deposited with it. The corporation is what is known as the Central Depository and Settlement Corporation (CDSC).
To open the CDS account, you can approach any Central Depository Agent (CDA) in the country and fill in the account opening form, commonly know as the CDS 1 form.
Wondering who a CDA is? Well, this is a Stockbroker, an Investment Bank or a Custodian Bank who have been authorized by the CDSC to open accounts in CDS on behalf of investors. CDAs include all member firms of the NSE and all Custodian Banks in Kenya.
When going to open your CDS account, remember to carry with you, two of your recently taken passport size photos and your original National ID or passport. As an individual investor, these are all what you need to get your account up and running. For a group, you could need your registration certificate and the other documents for your group officials as of an individual investor.
There you go, you now know how make your first step. But how do you go on trading at the bourse? That was your initial and prime reason for opening the CDS account anyway, right? Check out the next article on this series for that and more information on trading on shares.