Maximize Your Financial Potential: Smart Investment Strategies in Kenya

In the third episode, we looked at smart investment strategies with Terry Muhoro, who is a seasoned financial advisor with over 20 years of experience in the industry. In this discussion, Terry shared the diverse ways and means of navigating through the complex world of investments and proffered handy advice on how to get financial independence.

Understand the Role of Money in Your Investment Journey

Money is a tool to help steer you toward your financial goals but will never replace you as the driver of your financial journey. The good lesson is that it is not just having money but knowing how to use it wisely. Terry, through her enormous experience in personal financial planning, emphasizes the importance of understanding both risks and rewards with different investment options.

An Overview of the Investment Landscape in Kenya

Terry observed that most Kenyan investment behaviour was that many investors were busy chasing high returns without due consideration of the associated risks. This has led a vast number of people to lose money to schemes that offered too-good-to-be-true highs. However, effective investing could be properly done with a holistic approach where understanding risk is as crucial as seeking high return.

Don’t Just Save, Invest with Purpose.

Savings refers to the tucking away of money for future use, hence in a safe place like in a bank account. It is a form of capital preservation. SBM Bank offers such savings options through the high yield Platinum Saver account. On the other hand, investing means multiplying capital, where one tucks in money into opportunities whose value grows over time. SBM Bank as a CMA licensed authorised depository and securities dealer can provide investors with solid advice on local and offshore investment opportunities. 

Terry elaborates that investments go beyond money; they require discipline, time to realize the set financial goals—for instance, investment in a retirement fund is a long-term perspective, and a wise investor should not be tempted to utilise those funds.

Investment Options: From Money Market Funds to Treasury Bonds

Another key thing that was a highlight of the discussion was the fact that there are many options for investing, each one best for a given monetary goals and timeline. Money market funds are more suitable for short-term investments such as sinking funds for expected expenses. They are easy to liquidate hence they fit perfectly with goals such as saving for a holiday or an emergency fund.

On the other hand, treasury bills and bonds meet the needs of the more cautious investor. Treasury bills, unlike equities, have a term of three months to one year, while bonds investment tenors can run for several years. As periodic interest is earned with treasury bonds, most investors who need a regular income with a longer-term may choose this investment vehicle. It is best to invest in a combination of the lot to reduce the inherent risk.

Customizing Your Investment Plan

The decision to invest must be goal based. For example, right at the onset of the process of investment, one can decide to invest in the money market fund because it is easier to start with it and with a small amount of money. This can result in them getting motivated not just to save but to invest because of the effect of inflation and compound interest.

We discussed a 'laddering' strategy, which involves buying bonds at varying maturities. This could help develop a regular and predictable flow of income. Using this approach, an investor’s cash flows could be evened out to be more predictable and reduce anomalies.

Significance of Financial Education

Ultimately, there must be financial education. Anyone can probably invest their money well but how and where to invest requires both knowledge and discipline. With continuous learning and implementation of the same, we can make the right decisions that power our goals or aspirations in life.

You can watch the Smarter Tomorrow Podcast on YouTube, or listen on Spotify or iTunes. Follow us on social media @sbmbankkenya for more content like this. If you are looking for a financial partner to help you on your journey to financial success, SBM Bank can provide you with the best banking support. Learn more about us here, we’re one of the top banks in Kenya for personal and business banking. We offer excellent customer service 24/7.