Cheap vs Expensive Shares in Kenya: What Investors Should Know

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Cheap vs Expensive Shares in Kenya: What Investors Should Know Cheap vs Expensive Shares in Kenya: What Investors Should Know Introduction Many beginner investors in Kenya make one critical mistake when entering the stock market—they judge shares purely based on price. There is a widespread belief that cheap shares are good deals while expensive shares are risky or “too late” to invest in. This thinking often leads to poor investment decisions and missed opportunities in the Nairobi Securities Exchange (NSE). The reality is simple: the biggest mistake NSE beginners make is confusing share price with value. Understanding this difference is what separates smart investors from those who struggle to make consistent returns. What Are Shares? Shares represent ownership in a company. When you buy shares, you become a part-owner of that business. This means you can benefit in two main ways: Capital gains (when the share price increases) Dividends (profits s...
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Types of Shares in Kenya. And Which One You’re Probably Buying Without Knowing

 

Types of Shares in Kenya. And Which One You’re Probably Buying Without Knowing

Written by Postine Ngeli

Types of shares in Kenya explained

Investing in shares is one of the most effective ways to grow wealth in Kenya. However, many investors buy shares without understanding their type. Knowing the type of share affects dividends, voting rights, risk exposure, and long-term returns.

This guide explains the main types of shares, what they mean, and which ones you might be buying unknowingly.

1. Common Shares (Ordinary Shares)

What they are: Part-ownership in a company with voting rights.

  • Pros: Potential high returns, voting power
  • Cons: Dividends not guaranteed, higher risk

Example: Safaricom ordinary shares traded on the NSE.

📌 Learn more: Shares Are Long Term — But How Long Is Long Term?

2. Preferred Shares

What they are: Shares with fixed dividends and priority payouts, often without voting rights.

  • Pros: Stable income, lower risk than common shares
  • Cons: Limited capital growth, usually no voting rights

📌 Related: Why Most Kenyans Lose Money in Shares

3. Convertible, Redeemable & Other Share Types

TypeFeatureWhy It Matters
ConvertibleCan convert to common sharesFlexibility to benefit from growth
RedeemableCompany can buy backUseful for short-term financing
Non-RedeemablePermanent capitalLong-term ownership
BonusFree additional sharesReward from profits
RightsDiscounted offer to existing shareholdersRaises capital with existing investors

How to Choose the Right Shares

  • Goal: Income vs growth
  • Time horizon: Short (<3 years) vs long (5+ years)
  • Risk tolerance: Conservative vs aggressive

👉 Step-by-step guide: How to Buy Shares in Kenya (2025 Guide)

Shares vs Other Investments

  • Money Market Funds: Low risk, stable returns
  • SACCOs: Limited growth, safer
  • Shares: High potential returns but volatile

📌 Compare more: Shares vs Money Market Funds in Kenya

Common Mistakes Investors Make

  • Buying shares without knowing the type
  • Ignoring company fundamentals
  • Trading based on tips, not research
  • Failing to diversify across share types

Conclusion & Call-to-Action

Understanding share types lets you invest smarter and build long-term wealth.

👉 Ready to invest wisely? Start with our guide: How to Buy Shares in Kenya (2025 Guide)

💬 Comment below with your experience or questions — let’s help each other grow.

FAQ – Frequently Asked Questions

Q1: What are the main types of shares in Kenya?
A: Common (ordinary), preferred, redeemable, non-redeemable, convertible, bonus, and rights shares.

Q2: Which type of share do most Kenyans buy without knowing?
A: Common shares are the default and most widely purchased.

Q3: What is the difference between common and preferred shares?
A: Common shares offer voting rights and variable dividends; preferred shares pay fixed dividends and have priority but usually no voting rights.

Q4: Are shares long-term investments?
A: Yes. Ideally held for 5+ years to benefit from dividends and growth.

Q5: Can I invest in shares with a small amount?
A: Yes. Many brokers allow low-lot purchases or fractional shares.

About the Author

Postine Ngeli – Kenyan personal finance and stock market blogger at MoneyMarketHubKenya.blogspot.com. he helps investors understand financial markets, NSE shares, and smart investing strategies in Kenya.

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MoneyMarketHubKenya • Written by Postine Ngeli • © 2025 All Rights Reserved

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