Best Way to Invest Money in Kenya

Investing is a great way to manage your money and grow your wealth. Investing prepares you financially for eventualities like job loss, unexpected emergencies, inflation sickness or retirement. Wealth does not come overnight. It requires one to save and then invest.

Some investments are highly risky while others are less risky. As such, you need to assess each investment idea before putting your money into it. In this article, we will show you how and where to invest money in Kenya.

How Can I Invest my Money in Kenya?

The following are some of the best ways to invest money in Kenya.

1. Buy Government Securities

One of the the best ways to invest money in Kenya is through government securities. You can buy government bonds and accumulate interest over the years. Government bonds are secure and have higher returns. The government uses bonds to borrow money from the public and then pay back with interest after the agreed period.

Treasury bonds in Kenya have a repayment period of between 1 and 30 years. Interests are paid semi-annually or annually. You can also lend money to the Government through M-Akiba and earn 10% annually. With M-Akiba you can invest in as low as Ksh 3,000. Government bonds are a better way to invest your money compared to a savings account.

2. Invest in Real Estate

Real estate is one of the best ways to invest money in Kenya. You can invest in land, houses, or rental buildings. Real estate is capital intensive. However, you can invest in cheaper real estate properties like REITs with relatively less capital.

The market prices of real estate properties are often increasing, providing investors with good returns. Real estate is a great way to generate passive income.

3. Invest in Mutual Funds

A mutual fund is a pool of money contributed by several investors. Mutual funds are regulated by the government, while unit prices are affected by the market. Money contributed through a mutual fund is invested in different ways that offer high returns. It is important to note that mutual funds have some risks due to market price fluctuations.

You can invest in open-ended mutual funds or close-ended mutual funds. For open-ended mutual funds, you can withdraw your money anytime you need it. For close-ended mutual funds, you commit your money for a specified time. Withdrawing the money before the end of the specified duration attracts a penalty.

4. Invest in the Capital Market

You can invest in financial products through the Nairobi Stock Exchange (NSE). Through the NSE, you can invest in stocks, bonds, ETFs and REITs. Each financial product has a risk attached to it. As such, make sure you know how each product works before investing in it.

You can use a broker to help you grow your money by investing in financial products on your behalf. When selecting a broker, compare their charges with other brokers in the market.

Read more: How to buy shares in Kenya.

5. Open a Savings or Fixed Deposits Account

You can invest your money by opening a fixed deposit or a savings account. With time, your money will accumulate interest. Select a bank to use when opening an account. When looking for an investment bank, consider fees and interest rates on deposits. Most banks in Kenya provide interest rates of 5 percent per annum.

6. Peer to Peer Lending

You can also invest your money in Kenya through peer to peer lending. This is where you lend money to a small circle of friends, investors or businesses at an interest. The people you lend money to should be credit worthy to avoid losses.

7. Join a Sacco

Joining a Sacco will help you to save and also invest your money. Many Saccos in Kenya provide financial products that improve their member's financial capacity. Some of the products you will get in a Sacco include asset financing, advance salaries and credit services. Saccos offer low interest rates on loans compared to banks.

You can invest in a Sacco's share capital where you will be earning some dividends at the end of the year. Make sure to thoroughly research a Sacco before joining one.

Read more: Sacco vs money market fund.

8. Community Savings

A community saving is where people with a common interest join hands to contribute money to a kitty. When one of the members needs cash, he or she can borrow from the kitty with interest.

This way, members get to save money and grow their money through interests on loans advanced to the members. This way of saving and investing is common among Kenyan women organizations.

Most of the community savings schemes also contribute to charitable work in the community. When joining community savings schemes, you need to research the group thoroughly to avoid losing your money.

9. Start a Business

A business is a great way to grow your money. Before starting a business, you need to carry out a market research to determine the business's viability, startup costs, identify the market competition and business location. You also need to draft a business plan. A business plan acts as a road map of the business towards its objectives.

You can start an online business or a physical business. Give your business time while you are marketing it and with time, it will start generating profits. Most businesses take at least four months to break-even. Be patient and keep learning.

10. Alternative Investments

There are other ways you can invest your money online. For instance, you can start forex trading, commodity and forex derivatives or investing in cryptocurrencies or CFDs.

However, it is best that you first get some knowledge in alternative investment options to avoid losses. Some of these investment opportunities are not regulated by the government and hence, you need to be careful.

Summary of Best Way to Invest Money in Kenya

To start investing, you need to start with saving and then you can use your savings to invest. An investment can generate passive income over the years, even after your retirement. You need to have an investment plan so that you can save and then invest. Go for low-risk and low-cost investments if you are a beginner, and as you grow your investment skills, you can invest more money.