- There are many methods to help your money increase instead of letting it sit idly in a savings account or a household piggy bank.
- Financial advisor Walter Tarus pointed out that saving and investing money has the potential to increase via dividends, interest, or capital gains.
- Tarus mentioned that by conserving funds and producing dividends, individuals could reach their monetary goals, build wealth gradually, and enhance their fiscal security.
The .co.ke correspondent Japhet Ruto boasts more than eight years of expertise in covering finance, business, and technological sectors. His extensive knowledge provides valuable perspectives on Kenya’s economy as well as broader 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 money has the potential to increase via dividends, interest, or capital gains.
Tarus pointed out that through savings and earning dividends, individuals could reach their monetary goals, accumulate wealth gradually, and enhance their fiscal security.
"Many paths for investing await exploration. Engaging a financial consultant or performing comprehensive analysis might reveal investment prospects aligned with your risk appetite and fiscal goals. These choices include Saccos, state-backed instruments like Treasury Bills and Treasury Bonds, along with money market funds," explained Tarus during an exclusive talk with .co.ke.
Ways to invest money
1. Saccos
SACCOs are great for earning dividends and saving money.
Unlike conventional banks, these institutions typically provide more favorable interest rates on savings accounts and often share profits with their members through dividend payments, reflecting the cooperative’s overall financial success.
In the fiscal year concluding in December 2023, Tower Sacco, attracting both government and privately employed individuals 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, 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 harness the strength of compound interest, as the monthly earnings are 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 offer 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, yet provides an array of bond options over the course of the year.
From time to time, the National Treasury also issues 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.
These items 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 implies that investors select the sum they wish to receive upon maturity of the bill, which represents the face value of the bill, and pay an amount below this figure when buying it.
5. Company shares
By holding company stocks, individuals receive annual dividend payments and can 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).
As stated by the Kenya Association of Stockbrokers and Investment Banks (KASIB), the CDS has enhanced market efficiency and lowered transaction costs.
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 survey conducted by the Kenya Private Sector Alliance (KEPSA), approximately 1.2 million people, which constitutes five percent of the population in Kenya, engage in online employment.
The research indicated that individuals who work online receive an average of KSh 20,773, highlighting the significance of the digital economy.
