Highlights from a recent Interview Kenyan media personality Maina Kageni had with NSE Kenya Vice-Chairman Bob Karina
The minimum number of shares one can buy in the stock market is 100. Therefore, depending on the price per share, one can easily calculate the amount they need to invest. For instance, if the price per share is KSh10, then one only needs a minimum amount of KSh1,000 to invest. Thereafter, they continue to invest KSh1,000 every month. However, for one to invest in the stock market, they must have a Central Depository System (CDS) account, which is offered free of charge.
Treasury Bills (T-Bills)
Compared to Treasury Bonds, T-Bills have a shorter maturity period, ranging from 3 months, 6 months, to one year. The only limitation of T-Bills is that you have to wait for it t mature before you can opt-out. If you decide to opt-out before its maturity, you are penalized.
How it works: If the bill is trading at 8% interest and you want to invest KSh100,000, you will be required to pay only KSh92,000. Thereafter, when it matures, you receive KSh100,000. This means that the interest is paid beforehand.
Treasury Bonds (T-Bonds)
As opposed to T-Bills, Treasury bonds usually have a longer maturity period, with the shortest being one-year-long. For investment, one needs a minimum of KSh50,000, and it earns interest ranging from 11% to 13% depending on the one being sold at a particular time.
Thereafter, interest is paid after every six months (bi-annually).
For T-Bonds, one can opt out any time they want, even before maturity, because the bond is tradable. If one wants to opt out, they approach stock brokers and investment banks who will trade the bond on their behalf. Thereafter, the person who buys from then on continues to earn the interest until the maturity of the bond.
For T-Bonds, interest is paid in arrears.
How it works: If the bill is trading at 8% interest and you want to invest KSh100,000, you pay KSh100,000. Thereafter, when it matures, you receive KSh108,000.