Let these 5 benefits help you work through your decision-making process of investing in M-Akiba.
The government is set to float a three year fixed coupon bond through a special edition bond tomorrow. The aim is to increase access to investment in government bonds to the lowest level investor. Bond investing is commonplace for banks and serious investors. They invest to boost and diversify their investment portfolios and enhance performance. For most businesses, the decision to invest in bonds is an easy one. However, for those who do not know much about bonds, the benefits and drawbacks need to be closely considered before making a decision.
Below are the five biggest benefits of investing in M-Akiba that may help you work through your decision-making process:
# 1 Better Than the Bank
The interest rate offered by M-Akiba is greater than the one offered by banks (7% interest rate). Therefore, if you are saving and do not need the money in the short-term, bonds will give you a relatively better return at low risk. The M-Akiba bond is government-issued and hence is deemed to be “risk-free” and guaranteed, making it a safe place to park your savings.
All banks and investment institutions invest a portion of the funds you save with them in government securities. Banks currently hold over 50% of all government securities which are estimated to be worth almost 2 trillion Kenya shillings. So, why not cut out the banks and investment directly with the government through the M-Akiba platform and earn full value for your money.
#2 A Steady and Predictable Income
The M-Akiba infrastructure bond promises a 10% coupon, tax-free. This means that this special edition bond on the M-Akiba platform will pay 10% interest semi-annually.
For the next three years, the bond will make six payments on specified dates. The bond will provides some capital investment preservation at a time of high inflation rates. And also, a predictable income stream. Owning bonds enables you to predict with a greater degree of certainty how much income you will have within a given time.
#3 Low Minimum Investment
Minimum of KES 3,000 requirement, as opposed to the previous KES 50,000 that was the norm before. The lower requirement will enable anyone to save as much as they can into the platform and be guaranteed a minimum of 150 semi-annually (with a KES 3,000 initial investment).
So the more you save into the platform, the more you could potentially earn from the comfort of your mobile phone – leave alone these 7% returns being offered in the market currently by banks currently.
#4 Convenience
The future is here, and mobile-enabled investment provides us with a lot of control and convenience. According to the investment prospectus, all investments will be made via mobile money. All communication will be done through the same platform from application to remittance of coupon payments.
Bond investing is a very critical aspect of diversification of investment plans and through your mobile phone, you can quietly build a substantial amount over time.
#5 Freedom & Control
This M-Akiba bond will be the first of many and will offer opportunities to exercise your freedom to invest and control your own funds. The platform offers greater individual freedom as investors have the freedom to invest whatever amount they can.
Additionally, it offers investors an increasingly self-reliant option in securing their investments and thereby their own retirement. Freedom and control for whatever the purpose of saving – be it for your children’s college education, a new home, increasing your retirement income or for any number of financial goals – investing in M-Akiba may help you tremendously to achieve your financial objectives.
#6 Equity versus Debt
If you are looking to invest in the stock market and/or bond market, generally, investing in bonds (debt) is deemed to be safer than investing in equity (stock). The main reason for this is because debt holders are given more priority than shareholders.
Therefore, whether you are a holding company or government bonds, as a debt holder you are given first priority when it comes to payment. Therefore, at a time when the NSE 20 Share index is not doing so well, investing in bonds may prove to be a better option during these economic times.
#7 M-Akiba – A Double Benefit for Kenyans
According to the prospectus, this is an infrastructure bond, which means the funds raised will be geared towards infrastructure development. The success of M-Akiba could mean a lot for the future of this country as we can invest easily, earn some income and develop our country all at the same time.
Bottom Line
There are a lot of misconceptions about investing in bonds, first of which being that the interest is too low. However, bonds can offer an element of stability to your investments – they are safe and conservative as such are great savings vehicles with low risk. Remember that, it is patience that one needs to build real wealth not high outrageous interest rates/returns.
Happy Investing!
More Information:
So, how much should you invest? There is no easy answer to this question, however, look at your overall investments and see how much you are willing to put into the bonds.
How can you apply for M-Akiba? Before you apply, please read the M-Akiba prospectus. You can download it here M-Akiba Approved Prospectus (PDF).pdf .Then, dial *899# and follow instructions to apply.
Disclosure: This information is provided to you as a resource for informational purposes only. It is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal. This information is not intended to, and should not, form a primary basis for any investment decision that you may make. Always consult your own legal, tax or investment advisor before making any investment/tax/estate/financial planning considerations or decisions.
