- There are many methods for making your money grow instead of letting it sit idly in a bank account or a household piggy bank.
- Financial advisor Walter Tarus pointed out that saving and investing funds has the potential to increase wealth via dividends, interest, or capital gains.
- Tarus pointed out that by conserving funds and producing dividends, individuals could reach their monetary goals, accumulate wealth gradually, and enhance their fiscal security.
The website INSPIRATIONS DIGITAL.co.ke benefits from the expertise of journalist Japhet Ruto, who boasts more than eight years of experience in covering finance, business, and technological advancements. His extensive knowledge provides valuable perspectives on both local Kenyan and international economic patterns.
Several methods can be employed to grow your wealth rather than leaving it stagnant in a bank account or a savings jar.
Why invest your money?
Financial advisor Walter Tarus pointed out that saving and investing funds has the potential to increase wealth via dividends, interest, or capital gains.
Tarus pointed out that through saving and earning dividends, individuals could reach their financial goals, accumulate wealth gradually, and enhance their overall financial security.
"Many paths for investing await discovery. Seeking advice from a financial consultant or performing comprehensive analysis might reveal investment prospects aligned with your risk appetite and fiscal goals. These choices encompass SACCOs, governmental instruments like Treasury Bills and Treasury Bonds, along with money market funds,” Tarus shared exclusively with INSPIRATIONS DIGITAL.co.ke.
Ways to invest money
1. Saccos
SACCOs are great for generating dividends and saving money.
Unlike conventional banks, these institutions typically provide more generous interest rates on savings accounts and often share profits with their members through dividends, reflecting the financial success of the Sacco.
In the fiscal year concluding in December 2023, Tower Sacco, attracting both government and corporate employees through a required minimum monthly contribution of KSh 500, distributed returns as high as 20%.
Other institutions such as Hazina and Stima Sacco, which require a minimum monthly deposit of KSh 1,000, distributed 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 benefit from compound growth, as the interest earned each month is automatically added back to your original principal.
3. Treasury Bonds
As stated by the Central Bank of Kenya (CBK), Treasury Bonds represent medium- to long-term investment options that provide interest payments twice a year until their maturity date.
The regulatory body for banks conducts monthly auctions of Treasury bonds at a set interest rate but provides a range of bond options over the course of the year.
Sometimes, 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 of the bill, and they purchase these bills for an amount lower than their face value.
5. Company shares
By holding company stocks, individuals receive annual dividend payments and realize capital appreciation once they sell 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).
As stated by the Kenya Association of Stockbrokers and Investment Banks (KASIB), the CDS has enhanced market efficiency and cut down transaction expenses.
Methods for earning income over the internet
Other stories include various methods for earning income via the internet such as academic writing, freelance work, and producing content.
According to a KEPSA survey, at least 1.2 million Kenyans, which represents five percent of the population, engage in online work.
The research indicated that individuals who work online receive an average of KSh 20,773, highlighting the significance of the digital economy.
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