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How to Save, Spend, and Think Rationally About Money

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How to save, spend, and think rationally about money

Financial concerns can cause stress, regardless of income level. So, how do we shift our thinking around how to save, how to spend, and think rationally about money?

It entails reframing savings as a means of securing our future, rather than deprivation. Aligning spending with our values and goals, and confronting the emotions and biases that cloud our judgment. Therefore, through these practical ways and a deeper understanding of personal finance, we can navigate the complexities better.

Manage Fear About Money

Irrespective of age or financial status, people harbor fears and concerns about money. This pervasive fear and anxiety prevails within our society, thus the narrative around money instills fear rather than empowerment.

Studies show that people, irrespective of age or financial status, harbor fears and concerns about money. This insight highlights a fundamental issue within society, where the prevailing narrative around money instills fear rather than empowerment. Some norms and systems perpetuate this widespread anxiety surrounding money, making it difficult for individuals to overcome. This then, prompts deep reflection of oneself on how societal structures and cultural attitudes have contributed to your fear. Then, seek to shift towards fostering a healthier and more positive relationship with money for your well-being.

Related: 3 Ways the Emotional Elephant is a Danger to Your Finances

Avoid Narrow Framing

Narrow framing is the tendency of humans to focus only on the immediate problem at hand. Rather than considering the broader implications of recurring patterns, they frame things narrowly. As such end up taking a narrow view of decision-making, resulting in narrow outcomes. It is one of the weaknesses of human decision-making.

In personal finance, people often make decisions irrationally and narrowly. For instance, they will narrowly focus on savings and borrowing at the same time, rather than treating their entire portfolio of assets. This leads them to make suboptimal choices, like saving to borrow and borrowing to save cycle. Their choices, fail to take a broader view. Fail to consider decisions in the context of recurring problems or overarching themes that could lead to better outcomes. As a result, keep resolving the same problems over and over again, rather than make progress towards overall financial independence.

Build Numeracy & Broad Framing

Build your ability to understand and work with numbers. Also, utilize broad framing in making sound financial decisions. These concepts will provide a significant understanding of concepts like compound interest, which can greatly impact financial outcomes, whether one is borrowing or saving.

Additionally, framing decisions broadly and avoiding strong emotional reactions to gains and losses is crucial. By adopting a balanced perspective and maintaining limited emotional responses to fluctuations, individuals can navigate financial situations more effectively. They can make better decisions that are aligned with their long-term goals.

Happiness & Spending

Money can buy happiness – if you spend it right.

People often attribute deep emotional significance to money beyond its practical value. Money is seen as a means not only to happiness but also to feelings of superiority, security, and self-worth. The relationship between money and happiness is complex. While there is a common belief that more money will lead to more happiness, research suggests that this is not necessarily true. Simply acquiring more money does not guarantee increased happiness. Instead, understanding the nuances of how money is spent and the types of expenditures that contribute to happiness is crucial. This challenges the simplistic notion that money alone can buy happiness and prompts individuals to consider the quality and purpose of their spending to enhance overall well-being.

Time is Finite

Recognize the finite nature of time. And, the importance of making deliberate choices about how to spend one’s limited hours on Earth. With a significant portion of time dedicated to essential activities like sleeping and work, we are prompted to contemplate the remaining waking hours and what we truly value. This introspective process leads to existential questions about identity, purpose, and the desired impact of one’s actions. It encourages us to prioritize personal growth, experiences, and fulfillment in pursuit of a meaningful life. This echoes Mary Oliver’s sentiment of embracing the preciousness and uniqueness of one’s existence.

Keep in mind that, spending a significant portion of money on material possessions does not necessarily lead to greater happiness or life satisfaction. Despite the common belief that acquiring more stuff will bring fulfillment, research shows that there is no correlation. There is no correlation between the amount of money spent on personal items and overall happiness. This challenges the notion that material possessions can provide lasting contentment. It highlights the importance of reevaluating spending habits. We ought to prioritize experiences, relationships, and activities that contribute to genuine well-being and fulfillment.

Practice Mindfulness

We can reduce our consumption by around 20-25 percent by practicing mindfulness. By being mindful of spending habits, and questioning the value and impact of our purchases we can naturally reduce consumption. This highlights the significant role of unconsciousness in spending decisions. It underscores the power of conscious awareness in fostering more intentional and mindful consumption patterns. Many individuals report being surprised by the decrease in their spending once they start paying attention to their financial habits. By regularly evaluating whether purchases contribute to their happiness and align with their values, individuals can cultivate greater financial mindfulness. Resulting in making more informed choices that enhance overall well-being.

Learn More: 5 Steps To Developing A Winning Financial Plan

Invest In Experiences

Focusing on others and investing in experiences rather than material possessions can lead to greater happiness and fulfillment. Research suggests that acts of giving are associated with increased levels of happiness. Therefore, experiences such as charitable donations, treating friends to lunch, or buying gifts for loved ones – all increase levels of happiness. Thus, shifting spending habits from acquiring stuff to investing in experiences tends to result in higher levels of happiness. These experiences offer opportunities for social interaction and connection, which are essential for human well-being. Unlike material possessions, which often leave us isolated with our belongings, experiences are inherently social. They facilitate meaningful connections with others. By prioritizing acts of giving and investing in experiences, individuals can enhance their overall happiness and satisfaction in life.

Teach Your Children About Money

It is critical to educate children about money from a young age. We should provide them with the necessary tools and guidance to navigate financial decisions responsibly. Despite the prevalent lack of communication about money within families, it is essential to have open and age-appropriate discussions about money. Particularly, where money comes from, how it is earned and spent, and the concept of debt. It’s crucial to show children the reality of their financial situation rather than shielding them from it. Ignorance can be more burdensome than truth. Additionally, it’s important to limit the influence of money by separating chores from allowance. This allows children to understand the value of contributing to the family without financial incentives. Furthermore, allow them to make mistakes with their money while they are young when the stakes are lower. It provides valuable learning opportunities that can prevent more significant financial mistakes in the future. By empowering children with financial knowledge and allowing them to learn from their mistakes early, parents can better equip them to make informed decisions and manage finances effectively as they grow.

The Goldilocks Point

Shift from the traditional mindset of endless consumption driven by the belief that “more is better”. Instead, shift to a new paradigm that embraces the concept of “enough.” Previously, growth and consumption were seen as inherently positive. This led to an endless cycle of desire for more possessions and material wealth. However, the present challenges this notion by recognizing that there is a point of “enough”. A point where individuals have everything they need for a fulfilling life without excess. This “enough point” represents a vibrant and vital place where individuals can achieve true happiness and self-expression. A point aligned with their values and purpose. It is not about minimalism or deprivation but rather finding the optimal balance, the “Goldilocks point.” The Goldilocks point is the point where individuals have exactly what they need and want without excess. This shift in mindset towards “enough” serves as a pivotal concept bridging the gap between the past and present ideals for around money. Promoting a more sustainable and fulfilling approach to financial well-being.

To Wrap Up

Reframing. How to save, how to spend, how to think rationally about money with the above key points.

Reevaluate your attitudes towards money and embrace mindful practices. Pave your way for greater stability and peace of mind. Be confident, and ultimately unlock the door to financial freedom and a more prosperous future.

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4 Empowering Tiers to Navigate Your Journey to Financial Independence

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4 Empowering Tiers to Navigate Your Journey to Financial Independence

Financial freedom goes beyond mere independence from external constraints. It involves freeing one’s mind from the messages and pressures of consumer culture and the economy. It’s about recognizing one’s identity and agency independent of societal norms and expectations related to wealth and possessions. Whether someone is at the lower or higher end of the economic spectrum, if they are driven by a constant pursuit of more material wealth, they are not truly free. True financial freedom comes from understanding and embracing one’s relationship with the economy while resisting societal pressures to constantly accumulate and consume.

#1 Asserting Sovereignty

Recognize yourself as a sovereign being. A being in control of your financial destiny, rather than being controlled by economic forces or debt. To do so, you’ll need to free your mind from external control and assert sovereignty over your finances.

Thus, recognizing oneself as the ultimate decision-maker in financial matters, rather than being subject to the whims of the economy or societal pressures. By embracing this mindset, individuals empower themselves to align their financial decisions with their values, goals, and priorities. Allowing them to break free from the cycle of feeling powerless and controlled by debt or external forces.

Learn More: 6 Levels of Climbing the Wealth Ladder

#2 Debt Elimination

The first step towards financial independence is always going to be to stop accumulating debt. Liberate yourself from the burden of debt. Even seemingly insurmountable debt can be overcome with determination and discipline.

This step is crucial in breaking free from the constraints that debt imposes on one’s financial freedom. It begins with a conscious decision to halt the accumulation of debt. Then, is followed by proactive efforts to reduce and eventually eliminate existing debts. By prioritizing debt repayment and resisting the temptation to incur further debt, individuals can regain control over their financial destinies and pave the way for a more secure and empowered future.

#3 Building Emergency Savings.

Establish a robust emergency fund equivalent to six months of living expenses. This emergency fund can be held in liquid assets such as a bank or money market account. This fund acts as a buffer against unexpected financial setbacks, such as job loss. It enables individuals to avoid falling back into debt during times of crisis. By proactively saving for emergencies, individuals can mitigate the precariousness of their financial situations and achieve greater stability.

Additionally, as one progresses towards further financial independence, surplus savings can be strategically invested to generate passive income. This helps to reinforce long-term financial security and provides a means to grow wealth over time. Tracking expenses meticulously and adopting disciplined saving habits are essential components of this process. It empowers individuals to make informed financial decisions and prioritize their financial well-being.

#4 Investing For Passive Income

Once basic financial stability is achieved, surplus savings can be strategically invested to generate passive income. By carefully allocating funds to income-generating assets, individuals can diversify their sources of revenue and build wealth over time. Adopting a systematic approach to saving and investing, coupled with diligent tracking of expenses, allows individuals to monitor their progress and witness the growth of their passive income streams.

This layer reinforces the understanding that money represents one’s life energy and emphasizes the importance of making deliberate choices about how financial resources are utilized. By harnessing the power of investments, individuals can cultivate greater financial security and autonomy, ultimately achieving a higher level of financial independence.

Related: How to Calculate Your Financial Independence Number

All In All

all in all, achieving financial independence is a multifaceted journey comprised of four key layers. The first layer begins with freeing the mind from external control and asserting sovereignty over personal finances, empowering individuals to align their financial decisions with their values. Moving on to the second layer involves breaking free from the burden of debt, allowing individuals to regain control over their financial destinies. The third layer emphasizes the importance of building an emergency fund to navigate unexpected financial challenges and avoid falling back into debt. Finally, the fourth layer involves strategically investing surplus savings to generate passive income, reinforcing financial security and autonomy. By diligently progressing through these layers, individuals can pave the way toward true financial independence and unlock a future of financial freedom and abundance.

Image Credits: To by RDNE Stock Project via Pexels.

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7 Essential Factors to Consider While Buying Property in Kenya as a Foreigner

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Tea Plantation, buying property in Kenya as a foreigner

Your Guide to Buying Property in Kenya as a Foreigner: Key Considerations and Expert Insights

Are you considering investing in property in Kenya as a foreigner? Navigating the real estate market in a foreign country can be a daunting task. Having access to the right information and guidance can make all the difference. Whether you’re eyeing a piece of land for investment purposes or dreaming of owning your slice of paradise, understanding the intricacies of property ownership in Kenya is crucial. In this comprehensive guide, we’ll walk you through everything you need to know about buying property in Kenya as a foreigner. From legal requirements and regulations to due diligence and practical considerations, we’ve got you covered.

Let’s embark on this exciting journey together and unlock the potential of property ownership in Kenya.

#1 Owning Land/Buying property in Kenya as a Foreigner

As a foreigner, can you own land or any other form of real estate in Kenya?

Non-citizens are restricted from owning land outright, but they are permitted to enter into lease agreements for up to 99 years under leasehold tenure. This essentially prohibits non-citizens from owning freehold property.

Furthermore, the Constitution stipulates that if a non-citizen possesses any title document implying ownership beyond a 99-year lease, it will be interpreted as granting a leasehold interest for 99 years, and no longer.

In other words, even if the title document seems to grant ownership rights beyond the 99-year leasehold period, the law will disregard any claim to ownership beyond that duration. Instead, it will treat the individual as if they hold a lease for 99 years. This ensures compliance with the legal restriction on land ownership by non-citizens in Kenya.

Read More: How to Become a Real Estate Investor this Year

 #2. The Difference Between Freehold and Leasehold Land

Freehold land represents the highest level of ownership one can have over land, granting the owner absolute and perpetual control for their lifetime. This ownership can be passed down to descendants indefinitely, ensuring that the land remains within the family lineage for generations to come. Typically, a freehold title deed comes with minimal restrictions, allowing the owner full autonomy over how the land is utilized and occupied.

In contrast, leasehold interest in land entails the right to use and occupy the property for a specified duration, contingent upon the payment of rent or fees to the landowner, known as the grantor. Non-citizens in Kenya are generally limited to obtaining leasehold titles, with the lease period typically set at 99 years. This arrangement grants them a long-term stake in the property, albeit with certain limitations compared to freehold ownership.

#3 When A 99-Year Lease Runs Out, What Happens?

Section 13 of the Land Act says that when a leasehold title ends after 99 years, the Land Commission must give the previous leaseholder first dibs on buying the land again. But there’s a catch: only Kenyan citizens can get this offer, and the land shouldn’t be needed by the government for public use. This means if you’re not a citizen, you can’t extend the lease after 99 years.

#4 Ways to Own Land or Real Estate in Kenya

Foreigners can own land in Kenya through different means: firstly, by owning it in their name, referred to as “In-Person”; secondly, by having someone else or an entity hold the property on their behalf, known as “In Trust”; thirdly, through ownership by a foreign company in its name. However, it’s essential to note that there are limitations to property ownership by foreigners in Kenya.

As a way to circumvent the law, many non-citizens have attempted to establish and form companies to hold freehold property in Kenya. However, the Constitution is clear in its provisions, that a body corporate shall be regarded as a citizen only if it is wholly owned by one or more citizens. This means, that for a company to own freehold property, it must be wholly owned by one or more citizens.

Additionally, the Constitution further prevents non-citizens from freehold ownership of land through trusts. It states that if a trust holds property, it’s only considered owned by a citizen if all the benefits from that property go to citizens.


#5 Foreign Ownership of Agricultural Land In Kenya?

According to the Land Control Act, the Land Control Board won’t allow the transfer of agricultural land to someone who isn’t a Kenyan citizen. However, the Act does say that a non-citizen can own agricultural land if they get it as a first-time grant from the Government or if they get special permission from the President to buy it.

But here’s the thing: the only saving exception seems to be that a public company can own agricultural land, even if some of its shareholders aren’t Kenyan citizens. But if it’s a private company, every single person who has a stake in it must be a Kenyan citizen for it to own agricultural land.

#6 Foreign Ownership of Land/Real Estate for Commercial Purposes?

Non-citizens are allowed to invest in land in Kenya to make money or earn an income. However, it’s important to remember that foreigners can only use the land for business reasons. That is; setting up shops or offices, and not making money from renting them out for personal use.

#7 Conducting Due Diligence

It’s crucial to conduct thorough due diligence before investing in property. Start by considering and doing the following:

A. Laws & Regulations

Understanding the laws and regulations governing land ownership in Kenya is essential. Familiarize yourself with the Constitution, the Land Act, and other pertinent laws to ensure compliance. While foreign land purchases are allowed, certain strategic areas, such as coastal regions and border areas, have restrictions for national security reasons.

B. Title Search

Personally viewing the property, performing a title deed search, and completing all necessary land ownership documents. Be sure to request a copy of the leasehold title deed and conduct a search before making any investment decisions.

C. Consent to Transfer

Before purchasing land, foreigners must obtain a “consent to transfer” certificate from Kenya’s Ministry of Lands. This certificate confirms that the government has reviewed the proposed transaction and has no objections to it. Additionally, conducting thorough due diligence is imperative to identify any liens, encumbrances, or disputes associated with the land. This may involve a comprehensive title search, survey, and other investigations.

D. Purchase Process

The purchase process typically involves a deposit, signing a sale agreement, and registering the property transfer at the Ministry of Lands. Foreigners may also need permits for commercial or residential land development, adding complexity to the process. Working with professionals, such as conveyancing lawyers, ensures legal compliance and facilitates smooth transactions. A conveyancing lawyer can assist with agreement signings, transfer forms, and safeguarding your interests while mitigating risks associated with property transactions.

E. Other Considerations

In general terms, Here is how to go about the process of owning land or real statement:

  1. Obtain an Alien Land Holding License: Foreigners interested in leasing land in Kenya must first obtain an Alien Land Holding License from the Ministry of Lands and Physical Planning.
  2. Gather Required Documents: Prepare several documents, including a valid passport, proof of income, and a detailed proposal outlining the intended use of the land, as these are necessary for the license application.
  3. Conduct Due Diligence: Before proceeding with the lease agreement, conduct due diligence on the land. This involves checking for any outstanding debts or disputes over ownership to ensure a smooth transaction.
  4. Seek Legal Assistance: It is advisable to hire a reputable lawyer experienced in land transactions to guide you through the process and ensure compliance with legal requirements.
  5. Consider Costs: Understand that the cost of leasing land can vary depending on factors such as location, size of the property, and proposed use. As such, prepare to budget accordingly.
  6. Be Aware of Government Policies: Familiarize yourself with government policies that may restrict foreign ownership of land in certain areas, such as coastal regions. Stay informed to avoid any complications during the transaction.
  7. Consult with the Ministry: Before finalizing any agreements, consult with the Ministry of Lands and Physical Planning to stay updated on regulations and laws that may impact the process of buying or leasing land in Kenya.

Read More: Things You Need to Know About Investing in Real Estate In Kenya

Let’s Wrap it Up!

Non-citizens aren’t allowed to own land outright, but they can lease it for up to 99 years. To lease land, you’ll need to get an Alien Land Holding License from the Ministry of Lands and Physical Planning. This involves a thorough process and requires documents like your passport, proof of income, and a detailed plan for how you’ll use the land. Before you commit to leasing or buying property in Kenya as a foreigner, conduct due diligence. Ensure you research the land or real estate property, and check for any debts or ownership disputes.

For a smooth process of buying property in Kenya as a foreigner, consider hiring a trusted lawyer experienced in land transactions. The cost of leasing land varies based on factors like location and size. Keep in mind that the Kenyan government has rules limiting foreign land ownership in certain areas, such as coastal regions. Stay informed about these rules by consulting with the Ministry of Lands and Physical Planning. For the latest regulations and laws affecting land transactions in Kenya, reach out to them.

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Currency Trading in Kenya: Unleash Your Profit Potential in the Forex Market

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currency trading in Kenya using a mobile application

Are you ready to dive into the exciting world of currency trading in Kenya? Whether you’re a newbie looking to explore the forex market or an experienced trader seeking new opportunities, this blog post will guide you through the essentials of forex trading in Kenya. Get ready to unlock your profit potential and make your mark in the ever-evolving world of online trading.

The Kenyan Forex Market

Now, let’s focus on the forex market in Kenya. It’s a bustling industry that has seen significant growth in recent years. The availability of online trading platforms and the increasing interest from Kenyan investors have contributed to its popularity.

The Kenyan forex market operates primarily through authorized forex brokers and financial institutions. These entities are regulated by the Capital Markets Authority (CMA), ensuring a transparent and secure trading environment for traders.

I. Understanding Currency Trading

What is Forex Trading?

Forex trading, also known as currency trading, is the act of buying and selling currency pairs in the foreign exchange market. It is a decentralized global market where various currencies are traded. The forex market operates around the clock, allowing traders to participate in online trading at any time that suits their schedule.

The Benefits of Currency Trading

Let’s cut to the chase and talk about the moolah—the benefits of currency trading in Kenya! First and foremost, it offers immense earning potential. With some market knowledge, a solid strategy, and a bit of luck, you can make substantial profits in no time.

Secondly, currency trading is highly accessible. Unlike other forms of investment, you don’t need a massive amount of capital to get started. You can dip your toes in the forex market with as little as a few hundred dollars (or even less!) and gradually build your way up.

Choosing a Forex Broker and Trading Platform

To engage in currency trading effectively, you need a reliable forex broker and trading platform. Ensure you select a broker that is regulated by the relevant authorities in Kenya, such as the Central Bank of Kenya. Look for a platform that offers user-friendly features, advanced trading tools, and a wide range of currency pairs. Remember, a trustworthy broker is the foundation of your trading success.

Exploring Forex Analysis and Strategies

Successful forex trading requires a solid understanding of both technical analysis and fundamental analysis. Technical analysis involves studying forex charts and using indicators to identify potential patterns and trends. On the other hand, fundamental analysis involves analyzing economic indicators, news events, and central bank decisions that influence currency movements. Combining these two approaches can enhance your trading strategies and improve your decision-making abilities.

II. Managing Risks and Maximizing Profits

The Importance of Risk Management

Trading in the forex market involves risks, and it’s crucial to manage them effectively. Utilize risk management techniques such as setting stop-loss orders to limit potential losses. Additionally, consider using leverage carefully to control your exposure, as high leverage can amplify both profits and losses. Always remember, proper risk management is the key to long-term success in forex trading.

Profit Potential and Volatility

One of the reasons why forex trading is so popular is the significant profit potential it offers. With the right strategies, you can take advantage of market volatility and generate substantial profits. However, always bear in mind that higher volatility also means greater risks. Stay vigilant, follow market trends, and adapt your trading approach accordingly.

III. Avoiding Forex Scams

As with any lucrative market, the forex industry attracts both legitimate brokers and unscrupulous fraudsters. Protect yourself by choosing a licensed forex broker and conducting thorough research before investing your hard-earned money. Be cautious of unrealistic promises, guaranteed profits, and schemes that sound too good to be true. Remember, if it seems fishy, it probably is!

Getting Started in Currency Trading

Ready to jump into the action? Here’s how to get started in currency trading:

  1. Educate Yourself: Knowledge is power. Take the time to learn about the forex market, analyze trading strategies, and understand risk management techniques. There are plenty of online resources, courses, and webinars available to help you gain the necessary knowledge.
  2. Choose a Reliable Broker: Selecting the right forex broker is crucial. Look for a broker that is regulated, offers a user-friendly trading platform, competitive spreads, and excellent customer support.
  3. Practice with a Demo Account: Before risking your hard-earned cash, it’s wise to practice with a demo account. Most reputable brokers provide virtual trading accounts where you can trade with virtual money. This allows you to hone your skills and test your strategies without any real financial risk.
  4. Develop a Trading Plan: Like any successful endeavor, having a plan is key. Determine your trading goals, create a strategy, and stick to it. Emotions are the enemy when it comes to trading, so having a well-defined plan will keep you disciplined.
  5. Start Trading Live: Once you feel confident in your abilities, it’s time to start trading live. Start with small positions initially, and as you gain experience and see consistent profits, you can gradually increase your investment.

Related Post: The Complete Guide to The ABSA New Gold ETF

Top 10 Key Takeaways

  1. Educate Yourself: Learn the ins and outs of forex trading through reputable resources.
  2. Choose a Trustworthy Broker: Select a regulated broker with a user-friendly trading platform.
  3. Analyze, Analyze, Analyze: Combine technical and fundamental analysis to inform your trading decisions.
  4. Diversify Your Portfolio: Explore various currency pairs to maximize profit potential and minimize risks.
  5. Embrace Risk Management: Set stop loss orders and use leverage wisely to protect your investments.
  6. Stay informed: Keep up with economic indicators and central bank decisions that impact currency movements.
  7. Play It Safe: Watch out for forex scams and only invest with licensed and reputable brokers.
  8. Practice Makes Perfect: Open a demo account to hone your skills and test different trading strategies.
  9. Start Small, Grow Steady: Begin with modest investments and gradually increase your trading capital.
  10. Seek Professional Guidance: Consider joining forex trading communities and forums to learn from experienced traders.

Now that you have a better grasp of currency trading in Kenya, it’s time to take action! Open a trading account with a reputable broker, embrace continuous learning, and embark on your currency trading journey. Unleash your profit potential and make your mark in the world of forex trading like a true Kenyan hustler!

Image credits: Top by Photo by D’Vaughn Bell via Pexels.

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10 Passive Income Investment Opportunities for the Average Kenya

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There are so many ways to earn passive income, but here are only 10 passive income ideas for the average Kenyan. Keep in mind that passive income isn’t literally money without effort, but more akin to money with less effort.

What is passive income?

Passive income is income earned from an investment asset in which a person is not actively involved or actively employed to generate income. Passive income investment opportunities typically generate cash flow that requires little or no daily effort to maintain. This is not to say that passive income is easy money. It can be quite difficult for the average Kenyan to set up a passive income investment opportunity for themselves as it requires an upfront investment of either money, time, or both; the income as a result of it comes later. However, once you’ve made the initial investment, passive income pays off for years.

Examples include certain financial assets such as bonds or dividends, rental property, limited partnerships, or enterprise investments.

1. Dividend stocks and dividend index funds

Investing in dividend stocks is one of the simplest ways to build an income stream. Holding dividend stocks allows investors to receive earnings that a company distributes on a regular basis, such as quarterly, half-yearly, or yearly. A great dividend stock would be one that increases its payout over time, helping you grow your future income.

One advantage of investing in dividend stocks is that they are typically less volatile than growth stocks. Therefore, they can help diversify and even stabilize your investment portfolio. Additionally, investors can also reinvest the dividends back into the stock and potentially increase their investment if the stock does well.

For an even more hands-off approach, you can invest in dividend index funds. A dividend index fund that holds dividend stocks rather than you actively picking and choosing individual stocks to buy to make up your portfolio. Dividend index funds hold a great selection of well-rounded stocks that pay dividends, offering diversification benefits that can help balance portfolio risk, as market swings tend to be less volatile.

2. Exchange-traded funds (ETFs)

An exchange-traded fund is an investment fund that trades on an exchange, just like a stock. An ETF raises money from shareholders to buy and manage a portfolio of assets, in which each shareholder owns a piece of that portfolio in terms of shares. The shares are repriced at each transaction, based on demand and supply throughout the business day. When a shareholder decides to sell, they transfer their ownership stake in the portfolio of assets to someone else and receive cash in return. Typically, they are priced at their net asset value, but not always. They are good passive income producers as they collect diversified dividend streams.

Therefore, for a passive investor, investing in a dividend ETF can provide regular cash along with the added bonus of capital appreciation from the collection of assets held.

3. Bonds and bond index funds

Instead of buying a stake in a company through stocks, bonds are also another way investors can earn passive income by lending money to companies and the government to earn interest. Bonds are deemed safer investments than stocks, but they also generally offer a lower return on investment.

4. Money market funds

Money market funds are very similar to high-yield savings accounts and offer interest rates upwards of 7%. A money market fund is a mutual fund that invests in lower-risk securities like Treasury bills, bonds, and corporate bonds that pay a steady income.

5. High-yield savings accounts

High-yield savings accounts earn passive income with interest paid on savings. Though they offer lower returns than stocks or bonds, high-yield savings accounts are ideal for growing your emergency fund. High-yield accounts are insured savings accounts that earn a high interest rate and are worth looking into.

6. Peer-to-peer lending

Peer-to-peer lending or lending clubs are a great alternative to earning passive-interest income. Though riskier than putting cash in a high-yield savings account or money market fund, lending clubs could potentially earn you more—as much as 12%.

7. Rental Property

Real estate investment has always offered the best long-term bet to build a healthy passive rental income. Long-term or short-term rentals (like Airbnb) can provide a reliable source of cash from a steady source of renters. So, if you want to build a passive income from real estate, buy/sublease and manage your own property.

However, if you do not have the hefty down payment to purchase your own property, consider a Real Estate Investment Trust (REIT).

8. Real estate investment trusts (REITs)

Real Estate Investment Trusts (REITs) are companies that own commercial real estate such as office buildings, retail spaces, apartments, and hostels. REITs tend to pay high dividends, but they vary in complexity and availability. Some REITs are publicly traded on stock exchanges, offering dividends like dividend stocks. For new investors, it is best to stick to publicly traded REITs, which you can purchase through brokers.

Related: How to Create Wealth by Investing in Real Estate

9. Content

Content creation is another great way to generate passive income and cash flow at home. Creating content can be a lot of work that requires upfront effort, especially to create engaging content that appeals to a large enough audience to generate a good, sizeable income. However, once you’ve created something people like and are engaged in, it is possible to generate revenue by displaying advertising or running sponsored content. You may, however, find that the content you create doesn’t always stay green; therefore, over time, there will always be pressure to create more content or update what you have to keep it viable for longer.

10. Private Equity

For high-net-worth individuals, private equity is done through investing in private equity funds, which are typically only available to accredited investors who meet a certain net worth or income requirement. For the average person, private equity takes the form of backing family, friends, or other trusted partners to help fund their business with an agreement to earn returns from any future profits. Private equity in any shape or form, with large or small investments, is an inherently risky long-term bet. Therefore, a great rule of thumb here is to never invest more than you can afford to lose.

The Bottomline

Passive income is compensation for work already done. It requires a high upfront effort and/or investment to be made. It also has the potential to earn infinitely, provided the underlying asset(s) continue to exist. Passive income is a great way to boost your personal finances. And, as an investor, it is something you should seriously consider, even with the little you may have.

This list of passive income ideas is in no way exhaustive, and we would love to hear other ways you have been earning passive income in the comment section below.

Image Credits: Top by crazy motions via Pexels

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10 Dollar Fund Investments to Take Advantage of High Rates

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A graph and calendar showing the growth of a hundred dollar investment over time.

Today, there are several dollar-denominated funds available for investors with dollar cash flows who would like to continue earning dollar returns or investors who wish to diversify their Kenya shilling investments. These funds allow you to make the most of a stronger dollar and high-interest rate environment with these dollar fund investments.

Here’s a look at some options for the best dollar fund in Kenya for investors looking for stable income:

A. Fixed Income Fund

Fixed-income investments generally pay a fixed interest rate or dividend until maturity. These funds are suitable for conservative, income-oriented investors who want to diversify their investment portfolios. The fixed-income fund is particularly great for risk-averse investors with a short-term investment horizon.

1. NCBA Dollar Fixed Income Fund

Effective Annual Yield: 4.97%

The quoted rate is gross withholding tax and net of all expenses and is subject to 1% management fees per year. The fund seeks to preserve capital while generating regular interest income for unitholders by investing a combination of Eurobonds, USD fixed deposits, mutual funds, and other short-term interest-bearing assets. The fund is highly accessible, allowing daily withdrawals or investments of a minimum of USD 100.

2. Sanlam USD Fixed Income Fund

Effective Annual Yield: 6.6%

The effective annual yield is net of fees and gross of withholding tax. The Samliam USD Fixed Income Fund offers no fixed-period investment, as such, offering access at any time without loss of interest. The fund has an initial investment of USD 2500 and a minimum top-up of USD 500. The interest rate of the fund is compounded daily and monthly.

3. Nabo Capital Dollar Fixed Income Fund

Effective Annual Yield: 4.4%

The Nabo Fixed Income Fund (USD) aims to generate stable capital growth over the medium to long term while offering competitive returns on an annual basis. The fund invests in a mix of high-yield fixed-income sovereign and corporate bonds while balancing a sufficient level of liquidity.

B. Money Market Funds

Money market funds are a subclass of mutual funds designed to invest in highly liquid, fixed-income debt securities such as Treasury bills, commercial paper, and certificates of deposit. Compared to fixed-income funds, money market funds generally offer higher yields and are, however, not insured by the Kenya Deposit Insurance Corporation. They are particularly great for investors seeking relatively low-risk investments that offer a better return.

1. Dry Associates Money Market Fund

Effective Annual Yield: 4.8–5.11%

The Dry Associates Money Market Fund is ideal for individuals seeking liquidity and regular income. It offers a good alternative to traditional bank deposits, offering safety and income through a diversified portfolio of fixed-income securities. The minimum investment is USD 10,000, with a top-up amount of USD 1,000.

2. CIC Dollar Fund

Effective Annual Yield: 4.32%

The CIC Dollar Fund invests in government paper and liquid instruments such as Eurobonds, fixed deposits, demand deposits, and more. The fund offers competitive returns while providing capital preservation, stability, low risk, and diversification. The minimum investment is USD 1,000, and top-up amounts are USD 100.

3. Absa Dollar Money Market Fund

Effective Annual Yield: 3.44%

The Absa Dollar Money Market Fund aims to generate interest income from a wide range of US dollar-denominated short-term interest-bearing securities, such as fixed deposits.

4. Cytonn Money Market Fund (USD)

The Cytonn Money Market Fund (USD), invested in high-quality interest-bearing instruments, fixed deposits and cash equivalents in the Kenyan market to generate competitive returns for investors.

5. Standard Chartered Dollar Money Market Fund

Through the SC Mobile App, investors have access to a wide array of investment options, including a Dollar Money Market Fund. The fund invests in short-term, high-quality securities such as Treasury bills and Commercial paper. The minimum investment of the Fund is USD 100 and has a management fee of 0.25% per annum.

C. Growth Funds

1. Mansa X USD BY SIB

Effective Annual Yield: 8.71%

The Mansa X USD is a mixed-strategy fund that invests in the global market with the aim of capital growth. The fund invests across asset classes, notably in Eurobonds, German 10Y Bonds, Natural Gas, Gold, Taiwan Semiconductor Manufacturing Company, Microsoft Inc, Qualcomm Inc and more. The minimum investment is USD 2,500, and the minimum top-up is USD 1,000.

Related: What Are The Best Money Market Funds in Kenya?

Bottomline

With quite a number of dollar funds in Kenya, deciding which fund is right for you can be daunting. The current economic environment offers potential higher returns that can be made through dollar funds. The outlook is generally positive due to the strengthening dollar. With as little as a hundred dollars, you can take advantage of these gains and diversify your investments.

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5 Unconventional Money Tips That Can Help Your Finances

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5 Unconventional Money Tips That Can Help Your Finances

The internet is awash with personal finance advice, money tips and all sorts of advice that help the average person fine-tune their finances – most of which, should be taken with a shaker’s worth of salt. However, there are some unconventional ideas out there that even certified financial planners and experts agree with. Here are five (5) unconventional money tips that can help your finances.

1. Convert your expenses to hours of work

This is one of the most unorthodox, money tips out there and it works. Converting your expenses to hours of work means that you are thinking of your expenses in terms of hours of work i.e. how many hours of work do put in to earn the money to buy a particular item.

For example, if you make Ksh 1,000 an hour and you are thinking about buying a new phone that costs Ksh 20,000, you should think about how many hours of work it would take for you to earn that Ksh 20,000. In this case, it would take you 20 hours of work.

Thinking of your expenses this way, helps you to make more informed decisions about your spending and value your time and money a lot more.

Related: 5 Outdated Money Tips Millennials and Gen Zers Hate

2. Apply credit card rewards toward your long-term goals

Credit card rewards can be used to improve your long-term financial health when used towards your financial goals.

Many credit cards offer reward programs that can help you save money on shopping, travel or other expenses. As such, instead of just using your rewards for splurging, consider aligning those savings towards your financial goals.

For example, a cash-back reward from your credit card can be used to fund your retirement account, grow your savings or even pay down that high-interest debt. Additionally, you can also use those same cash backs to help reduce your overall monthly bills in savings and pay down your credit card balance when you redeem them as a statement credit.

3. Save your savings

Consider taking advantage of good deals around you to help boost your savings.

Therefore, the next time you buy something on sale, deposit the savings for that purchase into your savings account or any other high-yield savings account. This is a great technique to save money without having to put too much thought into it. However, as much as we are taking advantage of sales, let us not use sales as a reason to buy things that we do not need.

Learn More: How to Save Money in 14 Painless Ways

4. Buy basics on sale in bulk

Currently, the purchasing power of Ksh 1,000 is now worth Ksh 538. As months go by, the Kenya shillings continue to weaken impoverishing many. Therefore, every shilling saved increases your purchasing power.

So, stock up on basic items when they are on sale, and save over time. This is a great way to save money on everyday purchases. Considering how prices are on the rise every day, the cost of items like milk, toilet paper, cooking oil, unga and more keep rising. Buying as many of these times when on sale, to last you a long time will help you save a significant amount over time.

5. Visualize your future self

Visualization is a powerful tool that you can use to create an outcome you cannot see. Therefore, consider focusing your mental energy towards visualising the future self you want. Think about your financial goals in terms of your future self by considering how your financial decisions today will affect you in the future.

For instance, if you are considering buying a buy-on loan, think about how much that loan will cost you in the long run. That is in terms of how the loan will affect your ability to save for retirement for instance or any other financial goals.

Bottom line

These are some of the unconventional money tips floating on the internet that you might not have heard of before. If you are looking for creative ways to improve your financial situation, consider these to help you get started today.

Remember, that not all personal finance advice you find online, particularly on social media is good advice. Therefore, I hope these vetted and tested pieces of advice can help you reach your goals.

Don’t Be Afraid to Ask for Help

Sometimes, things can get quite difficult when we try to go at it all alone. If you are struggling with your finances, do not be afraid to ask for help from a qualified financial advisor or other professional. They can assist you to develop a plan to reach your financial goals and make sure that you are on the right track to achieve your financial goals.

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The Best Investing Advice for Kenya in 2023

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The Best Investing Advice for Kenya in 2023

Today, uncertainty is the only certainty. The epochal change now flips the script on valid investment strategies.

Inflation (amongst many other factors) has become a major problem creating great uncertainty. Inflation is now structural – not cyclical- which continues to force the government’s hand. And government policy has become quite aggressively tight, making the government the problem instead of the solution.

Rising interest rates are unsustainable long-term as excessive government debt becomes too expensive relative to receipts. This will force a solvency problem, which creates a quandary for the government because those higher interest rates are required to tame inflation.

Rising taxes, though deemed as anti-inflationary may become inflationary as it may cause prices to naturally go up as a result of reduced supply of goods and services relative to the quantity of money.

With all this in mind, here is the best investing advice in Kenya for 2023 so far:

1. Trade Against The Grain Vs A Trend Following Strategy

Two paths here. Trading against the gain which offers the best way to ramp up long-term investing profits. It means buying low and selling high – and that’s how you turn a profit.

Or, following the trend, which offers profits from the systemic tendency of the market to gradually incorporate new information. As such, tends to outperform when there are large economic shocks and market stress.

Whatever of these strategies you integrate into your investment goals, do not forget to manage risk.

For long-term investors, try to manage risk by rebalancing your portfolio. You sell stock investments or asset classes that have come to constitute a bigger portion of your portfolio and buy more of the stocks or EFTs that have underperformed – buying low and selling high.

For trend followers, keep in mind that the trend is only your friend until it ends. To manage the investment risk associated with trend-following, consistently monitor your portfolio. Buy stocks or EFTs that are in an uptrend and sell those that aren’t.

Related: How to Apply Warren Buffett’s Famous Investing Advice

2. Diversification

The question is whether to diversify or not to diversify.

Consider the view of the investment guru, Warren Buffet, who is famously known to be against diversification as he believes it only offers protection against ignorance. Diversification limits the downside of bad decisions and inadvertently, also limits the upside of good investing decisions. However, keep in mind Buffet has the resources and experience to better able to manage the consequences of any investment decisions he makes.

In the recent past, deep diversification has become even more difficult to achieve as many asset classes have become highly correlated. To adequately diversify and limit your risk, choose assets that are truly uncorrelated and look at relatively recent performance accounting for the recent epochal change today. You can also consider the following:

  • Mix and match a variety of strategies into your portfolio by the source of return.
  • Diversify by investment process to avoid limiting yourself to investment product diversification for risk management.

3. Invest in What You Know

As we said earlier, the only thing certain is change. The times are currently going through today cannot be judged through the lens of the past few decades of economic history. Now for more than ever, you need to have a much broader context to understand what is happening and how these changes in your investment and financial planning assumptions.

As such, stick to what you know. If you don’t understand a company’s business model, don’t invest in it. There are more variables at play causing the change, and some of them cannot be predicted accurately. For instance, the introduction of Artificial Intelligence (AI). We know for sure that AI will certainly have a big impact but it is very difficult to predict whether the big impact will yield great productivity advances thereby profits, or turbulence thereby destruction or end.

So, to invest wisely, take on only what you know. Understand how the company makes money, its lasting competitive advantage, and potential threats to those competitive advantages that could compromise future earnings. Without this in-depth insight, it will be harder to identify changes in the company’s long-term prospects. As a result, you may miss opportunities to increase our position or worst case scenario hold onto stock longer than you should.

By sticking to this one principle, many mistakes can be avoided – simply stay within your circumference of knowledge or competence.

4. Act-On Bargains

Seek out good deals. This is in terms of low stock prices, management fees and more. This doesn’t mean that you buy cheap assets that no one wants just for the sake of it. Look for value instead.

Value can be found in good companies at efficient prices. Adopt a more comprehensive approach when selling out long-term investment opportunities, incorporating economic trends and alternative markets that offer more robust tail protection and better average returns.

5. Invest for the Long Run

The surest path the wealth creation is through compound growth over the long haul. This can only be achieved through long-term focus. Therefore, be patient and always invest with good intentions thereby temporary downturns will not shake you up.

Therefore, when investing with a long view, here is a general rule. Any money you need in less than five years shouldn’t be invested in the stock market – for your short-term investment goals, consider putting your money in high-yield savings accounts, fixed deposits, money market accounts etc., instead.

Related: How to Evaluate The Quality of a Stock for Long-Term Value Investing

6. Take Advantage Employer Matching Contributions

Employer matching contribution is your employer will pay x shillings for every shilling to contribute towards the scheme. For example, If you contribute Ksh 10,000 yearly towards a certain employer matching plan, then your employer will contribute the same or a fraction of the same under your name towards the same plan.

If you are one of the few Kenyans who have access to employer-matching contributions for retirement plans or any other plans. Take advantage of this. This money grows tax-free while in the plan and is only taxable when withdrawn. You can accumulate a substantial amount over time if you diligently keep it.

7. Take. Profit.

Stay focused on your goals. Stay disciplined to sty on track. And, do not get too greedy and hold on to investments for longer than necessary – just take those profits!

Key Takeaways

Choosing to invest or not during this time of epochal change is a personal matter. I strongly advise you to do what is right for you, as one shoe doesn’t fit all. However, if you do choose to invest or make some changes to your current investments, you should follow a few more tips:

  • Don’t leave your assets or investments on auto-pilot.
  • Don’t obsessively track every market fluctuation.
  • Do set periodic reminders to review your investment portfolio.
  • Do make adjustments as your situation changes as the current economic crisis we are in plays out, it will ultimately get resolved. or plays out and the crisis or recession pl

All in all, Happy Investing!

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What Are The Best Money Market Funds in Kenya?

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best money market fund in Kenya

Are you looking to stash away your savings? What are the best money market funds in Kenya that earn consistent competitive returns with minimal risk exposure?

Money market funds are definitely a very popular low-risk investment option among investors. These funds invest in short-term, low-risk securities such as government bonds, treasury bills, commercial papers, bank deposits and more. As such, they offer competitive rates, long-term stability, and consistent and predictable returns which attract both inexperienced and experienced investors. They are the safest ways to grow your wealth through the power of compound interest with high liquidity and ease of access for capital preservation.

In this article, we will guide you through some of the best money market funds in Kenya with a focus on their performance, reputation and other vital factors.

1. Cytonn Money Market Fund – EAR 11%

The Cytonn Money Market Fund is the most popular and is considered the best fund among the best money market funds in Kenya. I believe this notion in the minds of investors is purely based on the fund’s return. The Cytonn Money Market Fund is currently the highest-earning Money Market Fund in Kenya. This fund is quite popular among Kenyan investors for delivering impressive yields over the years. In the past, the fund has faced some liquidity challenges and has since made strides to improve its operations with particular emphasis on risk management practices. However, please do not just take my word for it. It’s always advisable to conduct your own updated research and consult widely with the latest information before making any investment decisions.

The objective of the Cytonn Money Market Fund is to “obtain a high level of current income while protecting investors’ capital and liquidity.”

The Cytonn Money Market Fund Fact Sheet:

  • Launch Date: Nov 2017
  • Fund Manager: Cytonn Asset Managers Limited
  • Benchmark: Average 91-day T-Bill plus 1.0% points
  • Effective Annual Rate: 11%
  • Annual Management Fees: 1.5% pa
  • Minimum Investment: KES 1,000
  • Minimum Top-up: KES 100
  • Initial Fee: Nill
  • Redemption Fee: Nil
  • Trustee: Goal Advisory
  • Custodian: SBM Bank Kenya Ltd
  • Risk Profile: Low

Related: Should You Save With A Money Market or Savings Account?

2. Madison Money Market Fund – EAR 10.8%

The Madison Money Market Fund invests in a diversified portfolio of short-term debt securities, such as treasury and bank certificates of deposits. The fund has a low expense ratio and a consistent track record of performance since inception. As such, the Madison Money Market Fund is a good option for investors who are looking for low-risk investments with the opportunity to generate competitive returns over the short or long term.

The objective of the Madison Money Market Fund is to “achieve capital preservation by investing in short-term money market instruments…”

Here are some highlights of the Madison Money Fund Fact Sheet:

  • Launch Date: Nov 2011
  • Fund Size: KES 3.0B
  • Fund Manager: Madison Investment Managers Ltd
  • Benchmark: Average 91-day T-Bill
  • Effective Annual Rate: 10.8%
  • Annual Management Fees: 2% pa
  • Minimum Investment: KES 5,000
  • Minimum Top-up: KES 1,000
  • Initial Fee: Nill
  • Redemption Fee: Nil
  • Trustee: KCB Bank Kenya Ltd
  • Custodian: Equity Bank Kenya Limited
  • Auditor: Deloitte & Touche LLP
  • Risk Profile: Low-Medium

3. Zimele Money Market Fund – EAR 9.9%

The Zimele Money Market Fund, more commonly known as Zimele Savings Plan is a low-risk high yielding fund investing in a diversified portfolio of assets such as bank deposits, treasury bills and bonds. The fund offers investors the opportunity to build up substantial savings in a fund that prides itself in flexible operational convenience.

Here are some facts about the Zimele Money Market Fund:

  • Launch Date: Aug 1988
  • Fund Size: KES 1.2B
  • Fund Manager: Zimele Asset Management Company
  • Benchmark: Average 91-day T-Bill
  • Effective Annual Rate: 9.9%
  • Annual Management Fees: 2% pa
  • Minimum Investment: KES 100
  • Minimum Top-up: KES 100
  • Initial Fee: Nill
  • Redemption Fee: Nil
  • Trustee: KCB Bank Kenya Ltd
  • Custodian: Standard Chartered Bank
  • Auditor: Dennis Paul & Associates
  • Risk Profile: Low

4. Sanlam Pesa+ Money Market Fund – EAR 9.8%

The Sanlam Money Market Fund primarily invests in high-quality fixed-income securities such as treasury securities, corporate debt and cash and bank deposits, providing investors with a low-risk investment option. The fund has over the years maintained a stable and predictable return profile for its investors, making it a great choice for conservative investors.

The objective of the Sanlam Pesa+ Money Market Fund is to “deliver a higher level of income compared to average banks’ fixed deposit. Capital preservation is of primary importance and the fund offers immediate liquidity”

The main highlights of the Sanlam Pesa+ Money Market Fund:

  • Launch Date: Nov 2014
  • Fund Size: KES 17.3 billion
  • Fund Manager: Sanlam Investments East Africa Limited
  • Benchmark: 182 – day T- bill + 1% p.a (Money market, 100%)
  • Effective Annual Rate: 9.81%
  • Annual Management Fees: 1.2%
  • Minimum Investment: KES 2,500
  • Minimum Top-up: KES 1,000
  • Initial Fee: Nill
  • Redemption Fee: Nil
  • Trustee: Stanbic Bank Kenya Limited
  • Custodian: Stanbic Bank Kenya Limited
  • Auditor: PwC
  • Risk Profile: Low

5. CIC Money Market Fund – EAR 9.4%

In CIC Money Market Fund is also another favourite Fund amongst Kenyans. It is managed by CIC Asset Management Limited, which is a subsidiary of the CIC Insurance Group – a well-established financial institution with over five decades shoulder the risk of clients. As such, the Fund has a reputation for prudence and effective risk management, which has been able to deliver consistent stable returns over time. The CICI Money Market Fund primarily invests in government securities, bank deposits and high-quality corporate debt instruments to their steller returns.

The objective of the CIC Money Market Fund is to preserve capital whilst achieving long-term capital growth, stability, and minimal risk and offering a short-term investment option for surplus funds in times of market volatility.

CIC Money Market Fund highlights:

  • Launch Date: Jun 2011
  • Fund Manager: CIC Asset Management Ltd
  • Benchmark: Average 91-day T-Bill
  • Effective Annual Rate: 8.8%
  • Annual Management Fees: 2% pa
  • Minimum Investment: KES 5,000
  • Minimum Top-up: KES 1,000
  • Initial Fee: Nill
  • Redemption Fee: Nil
  • Trustee: Kenya Commercial Bank
  • Custodian: Co-op Custodial Services
  • Auditor: PWC
  • Risk Profile: Low

Learn more: How to Lose Money While Your Portfolio Rises in Value

6. Britam Money Market Fund – EAR 9.3%

The Britam Money Market Fund invests in short-term fixed-income securities such as treasury bills and bonds, commercial paper and bank deposits; to provide investors with both liquidity and minimize risk exposure. The fund has a history of delivering reliable consistent returns over time that further underscores its status as a dependable choice for investors.

The objective of the Britam Money Market fund is to provide investors with competitive returns and preservation of capital in the short term.

Here are some additional details about the Britam Money Market Fund:

  • Fund Manager: Britam Asset Managers (K) Ltd
  • Effective Annual Rate: 8-10%
  • Annual Management Fees: 1.5% pa
  • Minimum Investment: KES 1,000
  • Minimum Top-up: KES 1,000
  • Initial Fee: Nill
  • Redemption Fee: Nil
  • Trustee: KCB Bank Kenya Ltd
  • Custodian: Standard Chartered Bank
  • Auditor: Deloitte & Touché
  • Risk Profile: Low

7. Nabo Capital Money Market Fund – EAR 9.2%

The Nabo Capital Money Market Fund is available in both Kenyan Shillings and United States Dollars. The fund invests the KES-denominated fund in sovereign and corporate short-term debt securities, certificates of depots and bank deposits. The fund offers high returns at low risk and ease of access when needed within 48 hours.

The objective of the Nabo Capital Money Market Fund seeks to “maximize current income by investing primarily in a diversified portfolio of short-term debt securities whiles aiming to preserve capital and maintain a high degree of liquidity.”

  • Launch Date: Nov 2017 (USD Fund, Aug 2014)
  • Fund Size: KES 1.13 B (USD Fund, USD 1M+)
  • Fund Manager: Nabo Capital LTD
  • Benchmark: Average 91-day T-Bill (USD Fund, LIBOR USD 1 Month + 1%)
  • Effective Annual Rate: 9.2% (USD Fund, 3.4%)
  • Annual Management Fees: Up to 2.25%
  • Minimum Investment: KES 1,000,000 (USD Fund, USD 10,000)
  • Minimum Top-up: KES 10,000 (USD Fund, USD 1,000)
  • Initial Fee: Nill
  • Redemption Fee: Nil
  • Trustee: KCB Bank Kenya Ltd
  • Custodian: Stanbic Bank
  • Auditor: Grant Thornton
  • Risk Profile: Low

8. ICEA Lion Money Market Fund – EAR 9%

ICEA Lion Money Market Fund (managed by ICEA Lion Asset Management, a subsidiary of ICEA Lion Group) is a low-risk investment that offers investors the chance to earn consistent returns. The fund invests in a diversified portfolio of high-quality money markets instruments such as Treasury bills, Treasury bonds, Corporate bonds, bank deposits and cash. With its good track record, the fund has been able to offer investors with both short-term and long-term investment horizons, consistent returns with minimal risk.

The objective of the ICEA Lion Money Market Fund is to “achieve optimal returns while preserving capital”.

Here is the ICEA Lion Money Market Fund fact sheet (KES/USD):

  • Launch Date: Nov 2007
  • Fund Size: KES 14B
  • Fund Manager: ICEA Lion Asset Management
  • Benchmark: Average 91-day T-Bill
  • Effective Annual Rate: 9%
  • Annual Management Fees: 2% pa
  • Minimum Investment: KES 500
  • Minimum Top-up: No Limit
  • Initial Fee: Nill
  • Redemption Fee: Nil
  • Trustee: KCB Bank Kenya Ltd
  • Custodian: Standard Chartered Bank
  • Auditor: Deloitte
  • Risk Profile: Low

A Few Things to Keep In Mind

When choosing to make any investment, it is important to consider the following:

A. Your personal investment goals and your individual risk tolerance. Do they align with the fund’s investment objectives? Consider what type of investments the fund makes. Are they well within your risk profile? If you are looking for high-return investment, money market funds are not it. But, choose a fund with lower returns and low risk for a more conservative, consistent return.

B. Management fees charged by different money market funds. Fees will eat into your returns, it is important to strike a good balance when choosing a good fund and low fees.

C. Historical fund performance or track record. How has the fund performed in the past? Always consider how the fund has performed in the past. Though not a guarantee of future performance, it is a good indicator that it is likely to continue to perform well in the future.

D. Fund managers’ experience. Does the fund have experienced managers? Experience managers are less likely to make rocky mistakes with your money and therefore, are able to provide those consistent, stable returns you are seeking.

Learn More: How to Make Money From Treasury Bills

Final Thoughts

There you have it! The best money market funds in Kenya.

All in all performance, liquidity and reputation with a demonstrated ability to provide stability, attractive yields and effective risk management are all factors to consider when determining the fund you should invest in. The funds mentioned above may not be 100% but over time, they have proven themselves making their way to being one of the best money market funds in Kenya today.

However, it is always advisable to conduct your own research and make well-informed decisions that align with your investment goals and risk appetite. Do a thorough review of the funds you seek to invest in and consult with a financial advisor before making any investment decisions.

Happy investing!

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The 7 key principles to building wealth

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The 7 key principles to building wealth

Do you want to be rich?

Of course, you do!

Unfortunately, many of us do know the first thing about becoming rich, That is why I have compiled a list of seven key principles to building wealth. If you want to achieve financial independence, then you need to internalize and apply these key principles into your life.

Building wealth is a long-term process that requires discipline, patience, and the right mindset. Here are seven key principles to help you build wealth:

#1. Set Clear Goals

The first step to building wealth is defining clearly and concisely your own personal definition of wealth and what it means to do. This creates a clear picture of what your financial goals ought to be. It will help you identify what you want to achieve financially and create a plan to achieve those goals. This will enable you to have a clear picture of what your financial goals actually are.

A solid foundation for your goals will require you to:

  • Create a budget and stick to it. A budget will help you track your income and expenses, and make sure you are living well within your means.
  • Protect what’s important i.e. your family, health and assets. Purchase insurance and have your life covered to cushion your finances from unforeseen financial hurdles that life throws at you.
  • Invest for your future needs. Whatever long-term financial goals lay ahead, invest in them.
  • Consider your retirement. In order for your investments and savings last well past your active working years, adjust your investment strategy to consider your retirement. Not only should you have personal retirement investments, but incorporate life insurance and social security benefits as well.

#2. Spend Less Than You Earn

The importance of living below your means cannot be stressed enough. The less you spend, the more you can save and invest. By living below your means, you are less likely to find yourself in debt and/or increase your debt load beyond what you should rationally risk.

If start living below your means today, you’ll be well on your way to achieving financial freedom.

#3. Invest Early and Consistently

Many surveys and studies show that the earlier you invest, the richer you get. Investing is one of the best ways to build wealth over the long term. The earlier you start, the more time you have for your money to grow. While you are at it, be consistent. Compound interest is a powerful force and even small contributions made over a long period of time can result in significant returns.

Therefore, stay committed to your investment plan and avoid temptations to jump in and out of the market based on short-term fluctuations as we have experienced recently. Wherever you invest – stocks, real estate or other assets, make sure you are regularly putting money into the investment and taking advantage of the gains over time.

Related: The Importance of Compound Interest And Reinvestment

#4. Diversify Your Investments

Diversification is the key to managing risk in your investment portfolio and therefore, forms one of the key principles of building wealth. Diversifying helps reduce risk and increase the potential for higher returns. Consider investing in a variety of different asset classes, such as stocks, bonds and real estate to reduce the impact of market volatility on your overall returns. Even within each asset class, further diversity in a mix of large and small-cap stocks, domestic and international bonds, and different types of real estate investments.

#5. Minimize Taxes and Fees

Fees and taxes can eat away at your investment returns. So it’s important to minimise them wherever possible. Consider investing in low-cost investment options such as funds or ETFs and avoid high-fee mutual funds or actively managed investments. Also consider, investing in tax-efficient vehicles as as government bonds.

Always pay attention to trading fees, account maintenance fees, and other expenses that can add up over time.

#6. Exercise Patience And Stay Focused

As aforementioned, building wealth is a long-term process that requires discipline and focus. Avoid sideshows and distractions caused by short-term market fluctuations and hype.

Investing is a long-term game. Therefore, it is important to have a perspective that spans decades not just years. Also, avoid the hype and trends that arise every now and then. Also, avoid trying to time the market or make short-term trades based on news headlines or market rumours. Instead, focus on the fundamentals of the companies you are investing in and the long-term trends that driving the market.

#7. Continuously Educate Yourself

Be educated and consistently stay informed.

The investment landscape is constantly changing, and it is important to be educated about personal finance and informed about the latest trends and developments. Read books, articles, financial news and analysis, attend investment seminars and webinars, seek out advice from industry experts in the field and talk to other investors to stay up-to-date don’t the latest investment opportunities and strategies.

Being at the top of the information pyramid allows you to make better choices and have more realistic expectations. With informed decision-making, you have a better idea of risks and benefits related to the options available to you, which gives them a more realistic expectation of the decision outcome.

Related: 5 Financial Trends That Could Shape Your Finances in 2023

Final Thoughts

Building wealth through investing is not a quick or easy process, but by following these key principles, you can maximize your returns and achieve your financial goals. Start early, diversify your investments, minimize fees, have a long-term perspective, and stay informed. With patience, discipline, and a sound investment plan, you can build wealth and secure your financial future.

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