Yesterday afternoon after church we were munching lunch when I started the usual business talks with my dad. Curious on why lately I haven’t been told to free up my schedule for companies AGMs ( I always stared at those books when he attended them and my eagerness was not on the financial part but on why women were company secretaries and not men then the math followed suit.)
“Is there a company holding a meeting soon?” I asked as I enquired if there were more blackbeans left. “I only know of Sasini on 24th March,” he replied.
“I see,” I replied waiting for an invitation to accompany him.
“Come with ksh 2,000.” Damn that is how you get invited. “What for,” I asked agape.
“To buy shares,” he replied. That got me thinking I had bought KPLC shares and that is when I again for the 100th time asked how this share thing worked since I was now becoming confused at some point.
“You have to sell them or buy more,” was the response I got from my business minded brother Kamau. ” Muheria I keep saying we need to invest while we still young,” he turned to thump up my younger brother.
“I have a hen, (i) 🐔🐣 mwera so you know,” I had to brag to my dad for the progress am taking. “I bought it,” the reassurance answer I gave him when he gave me the ‘ where did you get it from look.’ Am retiring to farming in the days to come so I have to start behaving like a farmer, newsflash!
Back to shares…..
My dad had to figure an easy way to teach me or else his share jargons would not work well with a daughter good at financial accounting( math part) but failed to fathom mathematics the subject. Humor me😕! Nyambu he started off as my brothers came in for this lifetime lesson. Like a good teacher he had to use a narrative☺. Here we go….
“If you want to tell one about shares, compare it to a dairy cow. The benefits are milk, manure, calf or on a rainy day one can sell the cow. Shares are like the cow. When companies get profit they share out these profits as dividends to shareholders according to the number of shares one has. However, the profit can be ploughed back or retained and this is what we call retained earnings which can be used as capital. ( At that point I remembered where I used to input retained earnings in the profit and loss account.) The dividend is the milk. Shares can be used as security to get a loan from bank or even when one is arrested and in need of a bond the shares can come to the rescue. Manure from the cow is security. Appreciation also happens in shares when the amount you bought it goes higher with time meaning if you to sell them, then the more you gain. This is where bonuses come in and companies decide to give let’s say one for every 2…by splitting the shares. The calf from the cow is the bonus. On a bad day and you in need of money, one can sell their shares but you have to have many of them to get good money. The same happens to the cow or calf that may be sold by the farmer when he is need of money.”
“What does it mean when people say shares are going under?” Kamau asks.
“When the state of the economy is bad like right now when there is drought, election fever you find shares that were going for ksh 60 per share been bought for ksh30. Depreciation. Actually that is the best time to buy shares when the prices are low compared to when they are high. Reasons been when the economy booms, the prices go high and as a shareholder you get to sell them earning you profit. The vice-versa happens when you buy at a higher price.”
“The first thing you need is an account?” Asks again my intelligent one
“CDS account,” I reply to him.
“I don’t have one,” my not so concerned younger one gets off from his phone ( what is it with phones this days?😐)
“You all have them,” my silent mum chips in.
“I opened them for you all, can’ t you remember?” My dad tries to make the younger one come back to the business world.
Armed with useful knowledge I head to my bedroom and thankful for the information😊.
(Next we have decided to ask papa on share transfers 😀).
PS: Share trading is a good way to gamble than those sport pesa bets 😉.
(i)Mwera-female hen that lays eggs.