01 / 10
What Happens When You Buy a Share?
👤 → 📋 → 🏢 → 📈
Investor → Order → Market → Shareholding
Buying a share is more than simply clicking a button and receiving a piece
of paper. A share purchase involves several steps.
First, you decide which company you want to invest in. You then make sure
you understand the company, the investment risks and the amount you are
comfortable investing.
You normally place your order through a licensed stockbroker. The broker
helps send your instruction into the market.
Simple idea: You decide → place an order → the order is
matched → the transaction is completed → the shares are recorded in your
investment account.
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Step 1: Decide What You Want to Buy
🔎 🏢 📊
Research before you buy.
Before placing an order, you need to decide which listed company you want
to invest in.
This should not be based only on a friend's recommendation or a message
you received on WhatsApp.
Look at the company's business, financial information, dividends if relevant,
risks and other information available to investors.
Good habit: Know what you are buying before you place
your order.
The aim is not to predict the future perfectly. The aim is to make an
informed decision using the information available to you.
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Step 2: Decide How Much to Invest
Simple Example
Suppose you have decided that you can invest K5,000.
You should not automatically put the entire K5,000 into one share.
Consider your financial goals, risk level, investment costs and whether
you may need the money for other purposes.
You also need to consider the number of shares you can purchase at the
price available in the market.
Important: Only invest money that fits your financial
situation and investment plan. Investing carries risk.
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Step 3: Contact Your Stockbroker
👤
You
→
🏦
Stockbroker
→
📊
Market
For a listed share purchase, investors generally use a licensed
stockbroker to access the market.
Your broker can provide the process and information you need to place
an order.
The exact account-opening requirements, documents, fees and procedures
can vary, so check the current requirements with your broker.
Remember: Use a properly licensed and authorised
market intermediary.
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Step 4: Place Your Buy Order
📋 ✍️ 💻
You tell your broker what you want to buy.
When placing an order, important information may include the company,
the number of shares you want to buy and the price or order instructions,
depending on the type of order available.
For example, you may say that you want to buy 500 shares of a particular
company at a specified price.
Example
Company: Example Company
Quantity: 500 shares
Maximum price: K10 per share
Your broker then handles the order according to the market's rules and
the instructions you provided.
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Your Order Must Find a Seller
A very important part of buying shares is understanding that someone
needs to sell the shares you want to buy.
Your buy order does not automatically mean that the purchase will happen
immediately.
The order needs to be matched with a suitable sell order under the
market's trading rules.
Think of it like a marketplace: A buyer wants shares
and another investor is willing to sell them.
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The Trade Is Matched
Buy Order
500 Shares
⇄
Sell Order
500 Shares
→
✅
Trade
When a suitable buy order and sell order are matched according to the
market's rules, a trade can take place.
The agreed transaction price and quantity are recorded as part of the
trade.
This is the point where the buying and selling instructions come together
to create a completed market transaction.
A submitted order and a completed trade are not always the same thing.
An order may remain unmatched depending on market conditions.
08 / 10
Settlement Happens After the Trade
Trade
→
Settlement
→
Shares Recorded
Completing a trade is not necessarily the end of the process.
The transaction must go through settlement.
Settlement is the process through which the buyer pays for the purchase
and the securities are transferred and recorded according to the market's
settlement system.
The exact settlement process and timing depend on the applicable market
rules and should be confirmed from current official market information
or your broker.
Important: Trade execution and settlement are two
different stages of a share purchase.
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Your Shares Are Now Recorded
👤 → 📊 → 🏢
You become a shareholder.
After the transaction has been properly settled and recorded, the shares
are held for you through the relevant securities account and market
infrastructure.
You can then monitor your investment, receive information relevant to
shareholders and, where applicable, receive dividends or other shareholder
benefits.
Example
You purchased 500 shares.
After successful settlement, your records show that you own those shares.
If the company later declares a dividend and you meet the applicable
eligibility requirements, you may receive that dividend.
Keep your transaction records and regularly check your investment
statements.
10 / 10
🎓
Lesson Complete!
You now understand the basic journey of buying a share.
1
Research
Choose what you want to invest in.
2
Plan
Decide how much you can invest.
3
Order
Place your buy instruction through your broker.
4
Match
Your order must find a suitable seller.
5
Settle
The completed trade goes through settlement.
6
Own
Your shareholding is recorded.
Key message:
Buying a share is a process. Understand the company, understand the
costs and risks, use the proper market intermediary, and understand
what happens from placing an order through to settlement.
Buying your first shares can feel confusing when you do not know what happens behind the scenes. You may see a share price on a market page and wonder: How do I actually become the owner of those shares?
A share purchase is a process involving you, your stockbroker, the market, a seller and the settlement system.
The first step is deciding what you want to buy. Before placing an order, you should learn about the company, understand the risks and consider whether the investment fits your financial goals.
You then place a buy order through your stockbroker. Your order contains important information, such as the company, the number of shares you want and the relevant price or order instructions.
But placing an order does not necessarily mean that you have immediately bought the shares. A suitable sell order needs to be available for your order to be matched according to the market’s trading rules.
Once a trade is matched, it goes through the settlement process. Settlement is when the financial and securities sides of the transaction are completed according to the applicable market arrangements.
After successful settlement and recording, the shares are held for you through the relevant securities account and market infrastructure.
For example, if you buy 500 shares, you should eventually see those shares reflected in your investment records after the transaction has been properly settled.
In this lesson, you will follow the complete journey from researching a company and deciding how much to invest, through placing an order, matching, settlement and finally becoming a shareholder.
Understanding this process can make your first experience in the Zambian stock market much less confusing.
