The Nairobi Securities Exchange. As we stay at home, isolated, quarantined or locked down by the Covid-19 pandemic and preparing for the ‘new normal’, let us also make investments. PHOTO | FILE | NATION MEDIA GROUP As we stay at home, isolated, quarantined or locked down by the Covid-19 pandemic and preparing for the ‘new normal’, let us also make investments.
Treasury bills and bonds are controlled by the Central Bank of Kenya (CBK) and one has to open a “CDS account” with the Central Depository and Settlement Corporation (CDSC).
Treasury bonds are medium or long-term (5-20 years) and interest, on which the government levies withholding tax, is paid twice yearly.
Bonds are advertised monthly on the CBK website and also traded on the Nairobi Securities Exchange (NSE) as a secondary market.
They are a good way to invest in in the medium- and long-term because they are risk-free and offer good returns to pension funds, insurance companies and commercial banks who invest clients’ money.
Devaluation of shilling
The pain of devaluation of the shilling and inflation is borne by the client. But if you choose this path, open a US dollar account because of the stability of the ‘greenback’ compared to the shilling. The same applies to Treasury bills, although they are short-term (91, 182 or 364 days).
Shares are not for the faint-hearted. Share prices are like the wind: They blow in any direction without notice. Start with companies with a history of stability and growth.
The local telecommunications industry is a gem since Covid-19 is forcing us to be virtual in every of our undertaking, as are snack and beverage companies internationally.
Give instructions
It is advisable to trade in the NSE through a stockbroker; details of all the brokers are available on the NSE website. Open a CDS account with a broker who has an online or mobile platform, log onto their website and give instructions on when to buy or sell shares and at what price.You could also open an account with a minimum of Sh50,000 with the CBK. It’s a hands-on research-informed activity; projections and speculations determine gain or loss.The broker trades for clients at a State-regulated fee. The CDSC is the custodian of all shares. For the long term, shares are a good investment.Although insurance companies have Money Market funds (MMF), this is an area I would highly discourage anyone to invest in. In his book Devil on […]
