Wananchi Opinion: This is how you can invest even with little income

Have you ever thought of starting out on an investment journey, but then you keep on hesitating; maybe because your salary is little and wonder how or where to invest?

Most people on a small paycheck wonder how to invest with little money, and to their point, it’s not easy. That, however, doesn’t make it impossible, as all it takes is a great idea and a thought-after plan to execute it.

According to finance and investment expert Aya Laraya, ‘When you invest, you buy a day that you don’t have to work.’ I’m sure this is something you would want. After all, no one wants to work forever in a job they probably dislike or get paid peanuts.

As renowned author and business coach Grant Cardone puts it: ‘Investing puts money to work.’ He continues by saying, ‘The only reason to save money is to invest it.’

So, you can’t despise the little you are making. What matters is that you can put it to work wisely. And when you do it, you buy a day and many more that you won’t have to work.

When you’re starting out in your investing journey, it’s not about how much money you invest, it’s about mastering the habit of saving and investing consistently.

Kenya has a diverse economy, which gives investors several investments options to consider, that can provide financial security and growth.

Invest in Money Market Funds. Money Market funds is a scheme that pools money together from many investors, then invests them into selected portfolio of securities to achieve objectives of the trust. In return the investors get rewarded in form of interest.

To invest in money markets fund, you need to open an account with the preferred fund manager. Money Market Fund is a low-risk investment scheme that makes it a safe investment for a beginner.

In addition, you can invest as low as Kshs.500. This kind of investment enjoys an annual average rate of about 8 – 12.5% and you can withdraw your money any time you need.

You can also invest by taking up government bills and bonds. Government borrows from the public to fund some of its projects; through issuing treasury bills which are short term below 1 year and treasury bonds that are long term investment over one year. This scheme is suitable for a beginner in investment, since it is low-risk and return on interest is as high as 16.32% annually.

Investments in government securities are done through opening a CDS account either through the Central Bank of Kenya or a local commercial bank. You can start investing with a minimum investment of Ksh50,000 for treasury bills and a minimum investment of Ksh3,000 for treasury bonds (M-Akiba).

Most investors like dividend stocks because of the fact that they can provide a steady source of income with little or no work, much like interest from a bank account but with a greater potential for return on investment. When you reinvest dividend income, the magic of compounding increases your returns.

Dividend stocks refer to publicly traded companies that allow you to buy shares, hold them, and sell for profit when it suits you. A portion of their profits is paid to shareholders, which can be done monthly, quarterly, or annually.

These companies usually are listed by the NSE (Nairobi Securities Exchange), and some of the best dividend-paying stocks in Kenya have a dividend yield rate above 11%.

Join a Savings and Credit Cooperative Society (SACCO). SACCOs present many economic benefits to their members, among them; getting low interest loans, return on investment through dividends and instilling saving discipline. The minimum monthly contribution from a member could be as low as Kshs.1,000 therefore suitable for investors with little earnings.

If you want to join a SACCO, you must pay a registration fee which is mostly Kshs.1,000 but depends on the Sacco. To become a member, you must pay the minimum prescribed number of shares. This is payable either in lump sum or monthly instalments depending on the amount.

Each Sacco has a minimum amount of money that you will deposit monthly. These deposits are non-withdrawable but multiplied to give you a loan.

Fixed deposit is an investment option provided by a bank, in which a customer deposits (locks up) a specified amount of money for a certain period and interest is paid at a competitive rate. It is suitable for someone who wants to start investing because; you can invest any amount of money; it is risk free and guarantees fixed returns.

When it comes to investing in fixed deposits, you need to open a bank account with a commercial bank.

Venture into Agribusiness. Kenya is an agribusiness country. Gone are the days when agriculture was perceived as work for the unschooled and those in the village. Nowadays, even the most educated venture into agribusiness for commercial purposes, and it’s such an attractive venture because people must eat.

Some pursuable gold mines in the agribusiness include: Avocado farming, beekeeping, fish farming, poultry rearing, vegetable gardening, tree tomato farming and animal feed production.

Buy stakes in Real Estate Investment Trusts (REITs). Realistically, owning a physical property with little money is nearly impossible. The real estate sector is costly, and the ones calling the shorts are the money bags. But does that mean you can’t invest in real estate with a small paycheck?

Of course not, Real Estate Investment Trusts are companies that let you buy stakes or units in real estate without tangibly owning the property and earning a regular income. You may start with as little as Ksh1,000 to buy REITs in Kenya.

Examples of REIT in Kenya include the Stanlib Fahari I-REIT, Acorn ASA I-REIT and Acorn Student Accommodation Development REIT (famously Acorn D-REIT).

No matter what financial stage you are in, investments are blessings in disguise. Whichever investment decision you make today, it determines your future financial freedom and independence. All it takes is a brilliant investment idea and perfect execution.

Mr. Abol Kings is a former banker, financial literacy coach and a teacher in Kenya.