9 Passive Income Investment Ideas 💡 for Kenyans in 2024💸

Passive Income Ideas. Nine ways you can create passive income through Investments this year.

Today we’re going to look at nine ways you can supplement your income whether you are a 9 to 5 employee or simply someone looking to diversify or create multiple streams of income with less effort.

We are going to structure it this way:  we are going to mention what that stream of income is, the average investment return plus an example and the level of difficulty.

let’s get started.

1. Interest from money market funds

A money market fund is a type of unit trust. Basically, these are a collection of people’s money that is used to invest in various financial instruments such as Government bills, fixed deposits and so on now the average return in 2023 was between 11.6 to 15% per annum.

In addition to that, the average for 14 of the best money market funds in Kenya was 13%.

Let’s take for example if you invested if you had invested 100,000 in a money market fund giving an average of 13% you would have received around 13,000 in passive income.

Let’s take a bigger example. For example, if you had a million that would have amounted to 130,000 per annum.

This is as of last year. I would rate this type of passive income at two out of 10 now.

2. Dividend stocks

what are dividends?

Basically, Dividends are a way for a company to share its profit with shareholders (people who invest in these companies)

The average return for dividend stocks in terms of dividend yield  ( see table below, the five highest dividend stocks as of 2023)

The top dividend stock of 2023 was at 16.8%.

Let’s say that you owned 100,000 shares of umeme as of last year. Your passive income from that company would have been (100,000 * 2.22) around Kes 22,000 in passive income

Difficulty level

I would rate it 8 out of 10

An example of an employee who is reaping the benefits of passive income through dividend stocks is the CEO of Equity James Mwangi. Who received over kes 600 million in dividends from owning Equity shares.

Equity issued gave its shareholders 4 Shillings per share.

3. Bond coupons as passive income

When you invest in bonds you are lending money to the government in exchange for interest. This interest is also known as coupons.

The minimum investment for bonds is around kes 100,000. But last year in November the CBK lowered this minimum investment to kes 50,000.

This November IFB(Infrastructure Bond) gave a yield of 17 .9%.

let’s say that you invest a million in a bond that is giving a rate of 18%.

You will get around kes 180,000 ( and remember an IFB is tax-free) issued in to after every 6 months. That would be around kes 90,000 every 6 months.

A side note the CBK (Central Bank of Kenya) issues bonds every month. I would rate investing in bonds at six out of 10.

4. Dividend REITs

REITs, Real Estate Investment Trusts, are simply companies that either own or invest in real estate property.

In Kenya, REITs are mandated by the Constitution to pay out 80% of the net income to investors. The only REIT that was listed on the main Market segment of the Kenyon stock market,  is the ilam fahari I REIT. Whereby the minimum investment for this REIT in Kenya is around 700 Shillings.

Last year this REIT gave its investors a dividend of 0.65% per share.

Let’s say that you had 10,000 shares of this REIT. You would have gone home with around kes 6,500.

I would rate this investment or passive income idea an eight out of 10.

note that the ilam fahari I-REIT was said to be removed from the main Market segment. However, as part of the time that I am creating in this article, this has not happened yet.

In addition to that the public is still investing in this REIT.

5. Sacco dividends and interests

The word Sacco stands for a savings and Credit Corporation.

What this means is that you get to save money and qualify for loans. Apart from qualifying for loans, you can also earn from your savings. That is share capital and deposits.

let’s take the example of Nyati Sacco which as of last year was giving its members 21% on share capital and 11% on deposits.

let’s say for example you have kes 20,000 in share Capital that is and 300,000 in deposits which would give you around 37,000 in passive income from Sacco dividends and interest.

I would rate this method of earning passive income a five out of 10.

Beginners ultimate guide to investing the right SACCO

6. USD money market funds

A USD money market fund is simply a US version

of the Kenyan money market funds.

The minimum investment for most on average is around $1000 and the average rate of return is between 5 to 6 per annum.

Let’s say that you have 1,000 USD in a money market fund it will give you around Kes 8,000 in return. I would rate this method of earning passive income are five out of 10.

7. Offshore dividend stocks for passive income

Dividend stocks are when companies share part of their profits with shareholders.

Here are the top five dividend stocks of 2023.

Yes, you can invest in US Stocks while in Kenya. You can do this through various trading platforms and institutions right here in Kenya.

You’ve read that right. You can own companies like Facebook, Google, NVIDIA and so many other companies. I would rate the difficulty level a six out of 10. Why because there is so much information out there by various institutions, bloggers and so on about the US stock markets.

Also, there is something called copy trading. This means you can copy the trades or investment companies of successful investors in the US Stock Market.

 

8. Offshore Dividend ETFs

What are ETFs?

Basically, an ETF is a basket of assets like stocks that you get to own. Instead of buying one share, you get to own several shares at once.

The minimum investment in Kenya is around $5. I would rate the difficulty level a four out of 10.

Why? Because all the hard work of choosing the stocks to invest in has already been done for you by professionals. Who manages this basket of assets for you.

Here are some of the best offshore dividend ETFs as of 2023

9. owning offshore dividend REITs

A REIT is an investment company that mainly focuses on real estate property. In the US REITs have a payout ratio of 90% of their net income.

The minimum investment for this type of investment is around $5. I would rate this investment option /passive income Source an eight out of 10.

Why? Because you have to do a lot of investment research and also keep up to date with the performance of that REIT.

There you go. 9 passive income ideas you can create this year. Let me know what other passive income stream should we know about. As always, make sure you do your own research first before investing in anything.

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