One of the most exciting opportunities that most Kenyans miss out on is investing in global stocks & ETFs Yes, you can invest in Amazon, Nvidia, Google, Tesla, etc as a Kenyan. Here's why this is one of the investing opportunities that you shouldn't miss out on👇👇
1. Performance If you compare the historical performance of the Nairobi Securities Exchange (NSE) and the New York Stock Exchange (NYSE) The results are like day and night. From 2008 - 2023, the NSE had a return of -0.08% as shown by the Nairobi All Share Index (NASI) The
2/ Access to Exchange Traded Funds Investing in the stock market can be complex for the average person, because analyzing stocks and reading financial statement require some level of expertise and luck. However, Exchange Traded Funds(ETFs) simplify things. You don't need to
What are ETFs? To understand what an ETF is, we have to first understand what an index is. An index is used to track the performance of a certain sector of the stock market or even track the entire stock market. A simplified example, if you want to track the average
In the U.S. stock market, we have two major indices: 1. The S&P 500 - Tracks the performance of the top 500 companies listed in the NYSE 2. The Nasdaq 100 - Tracks the performance of top non financial companies listed on the Nasdaq exchange. The U.S. has two major stock
For you to invest in an index, you need to identify an index fund or an ETF that is offered by fund firm which offers a fund that tries to mirror the stocks or securities in that index. For example if you want to invest in the S&P 500, you have to identify fund firms that offer
For this example we will use the ETF by Vanguard that tracks the S&P 500 which is called VOO and represented as $VOO The use of a dollar sign signifies a ticker symbol that is used to represent a security which could be a stock or an ETF in this case Such ETFs can be accessed
How do these ETFs perform? In 2023, the S&P 500: + 21% In 2023, the Nasdaq 100: +53% The S&P 500 has registered an annualized return of 10.5% from 1957-2023 No investor who has investor in the S&P 500 for 20 years any time since 1900 who has lost money. Only in 2 decades has
In summary, investing in ETFs is like investing in a basket of stocks. Since you don't know which stock will do well in the long term, you can instead buy the entire stock market, or a certain sector of the stock market. This increases your chances of making money in the stock
3. It is easier to access global stocks than local stocks in the NSE. Why? a) You can start investing from as low as $1 due to what we call fractional shares. Where you don't have to buy a whole share of a stock to be a shareholder. For example if 1 share of Apple is trading
So how do you access global stocks & ETFs There are a few brokers that you can choose from but today we will focus on @HisaApp Their product offering allows you to invest in global stocks and ETFs from as low as $1 You don't even need a USD bank account as you can easily
Why Hisa? 1. They only charge a 1% commission on all trades which is low compared to other Kenyan brokers 2. It's easy to register an account and start investing, unlike using other foreign brokers who have a lot of requirements. 3. You can start with as low as $1 4. Their
Who should invest in offshore stocks? 1. If you are looking for USD backed assets. The KES depreciates against the USD at an average annual rate of about 2-4% 2. If your financial goal is capital appreciation 3. Add diversification to your portfolio 4. Access the stock
What are the cons of investing in offshore stocks & ETFs? 1. Dividends are taxed at 30% But as I've always advised, offshore stocks are best for capital gains, which are tax free If you are looking for dividend income, focus on the NSE. There are some good counters with good