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There are various methods to help your money expand instead of letting it sit idly in a savings account or a household piggy bank.
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Financial advisor Walter Tarus pointed out that saving and investing funds has the potential to increase via dividends, interest, or capital gains.
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Tarus pointed out that by conserving funds and producing dividends, individuals could reach their monetary goals, build up wealth gradually, and enhance their fiscal security.
The journalist Japhet Ruto from LIFEHACK.co.ke boasts more than eight years of expertise in covering finance, business, and technological news. His extensive knowledge provides valuable perspectives on both Kenya’s and international economic patterns.
Several methods can be employed to boost your finances rather than leaving them stagnant in a bank account or a savings jar at home.
Why invest your money?
Financial advisor Walter Tarus pointed out that saving and investing money has the potential to increase substantially via dividends, interest, or capital gains.
Tarus pointed out that through saving and earning dividends, individuals could reach their financial goals, build wealth gradually, and enhance their fiscal security.
“Several paths for investing await discovery. You might consult a financial advisor or perform extensive research to uncover investment possibilities aligned with your risk appetite and fiscal goals. These alternatives include Saccos, government instruments like Treasury Bills and Treasury Bonds, along with money market funds,” Tarus shared exclusively with LIFEHACK.co.ke.
Ways to invest money
1. Saccos
SACCOs are great for earning dividends and saving money.
Unlike conventional banks, they typically provide more generous interest rates on savings accounts and often share profits with their members as dividends, reflecting the SACCO’s overall financial success.
In the fiscal year concluding in December 2023, Tower Sacco, attracting both government and corporate employees who contribute at least KSh 500 per month, distributed dividends as high as 20%.
Other institutions such as Hazina and Stima Sacco, which require a minimum monthly contribution of KSh 1,000, offered returns of 17% and 15%, respectively.
2. Money market funds
Tarus disclosed that money market funds (MMFs) provide interest rates approximately 10-12% per year above those offered by conventional bank savings accounts.
Money Market Funds provide the flexibility to enroll and withdraw funds whenever needed. These funds can be appropriate for both short-term and long-term investment strategies.
Tarus mentioned that this investment allows you to harness the benefits of compound interest, as the monthly earnings are automatically added back to your principal amount.
3. Treasury Bonds
As stated by the Central Bank of Kenya (CBK), Treasury Bonds represent medium- to long-term investment options that offer interest payments twice annually until their maturity date.
The regulatory body for banks conducts monthly auctions of Treasury bonds at a set interest rate, yet provides an array of bond options over the course of the year.
From time to time, the National Treasury also provides tax-free infrastructure bonds.
4. Treasury Bills
Treasury bills provide coupon rates of 16.72%, 16.87%, and 16.98% for the terms of 91 days, 182 days, and 364 days, respectively.
They are sold every week and can be reached via the CBK’s Dhow Portal.
The Central Bank of Kenya (CBK) explained that treasury bills are offered at a discount. This indicates that investors select the sum they wish to receive upon maturity of the bill, which represents the face value, and pay an amount below this figure when buying it.
5. Company shares
By holding company stocks, individuals receive annual dividend payments and realize capital gains upon selling their shares.
In order to purchase or trade shares, individuals are required to establish a Central Depository System (CDS) account with companies that are listed on the Nairobi Securities Exchange (NSE).
The Kenya Association of Stockbrokers and Investment Banks (KASIB) states that the CDS has enhanced market efficiency and lowered transaction costs.
Methods for earning income on the internet
Other updates include various methods for earning income via the internet such as academic writing, freelance work, and producing content.
According to a survey conducted by the Kenya Private Sector Alliance (KEPSA), approximately 1.2 million people, which constitutes five percent of the Kenyan population, engage in online work.
The research indicated that individuals who work online make an average of KSh 20,773, highlighting the significance of the digital economy.
