As young people, we have all the excuses about why we should not start investing now.
I am young, I have all the time in the world.
I don’t have a lot of money to start investing.
These are simply excuses that limit us.
For young adults, the earlier you start investing the better.
Have you ever heard about compound interest?
No, well when you start investing early you set yourself years apart from those who start investing in their 40’s.
You set yourself up for financial freedom early.
Let me say this, there’s a difference between saving and investing.
Saving is setting some money apart so that you can use it later.
That is why people save in a bank. Because they will use the money after some time.
Whereas investing is placing your money somewhere so that it can earn you more money.
Below are a few of the investments that you can start investing in with as low as ksh.250 and get a daily compound interest rate of return that is as high as 10% per annum.
This type of investment is called a money market fund.
A money market fund is a low-risk kind of investment.
This is whereby you get to invest in securities that have a fixed and secured rate of interest.
Such securities include commercial paper, cash, and cash equivalents, short term bonds to name but a few.
The best part is that after some time you can get back your initial investment that is the principal and interest earned.
This is a win-win for you.
What to consider when choosing a money market investment fund
The first thing is to look at the stability of the company.
a). Looking at how long the company has been in existence.
b) Look at the financial performance of the company.
We don’t want to put our money in a sinking hole, do we?
c) Look at the management as well. Who are the directors and such details.
We can never be too thorough when it comes to our hard-earned money so take your time and research.
The second thing is to look at their withdrawal terms and conditions.
I know that we don’t like reading these overwhelming details but we need to read and understand them.
If you don’t understand their terms and conditions ask someone who does.
In this case a financial advisor.
Reading through the withdrawal terms will also help us learn how soon we can withdraw our money.
In some money market funds, you can only make a withdrawal once.
The third thing is to look at the investment funds’ fees
Are the fees too high?
Compare them with those of other firms in this industry.
The last thing to look at is the interest rates.
Are the interest rates simple interest or compound interest?
In simple interest, the rate ranges between 4% and 7%.
This type of rate does not yield much money.
This is the type of rate that banks give when you put your money in the bank account.
Whereas compound interest the rate is between 7% and 11%.
In most unit trusts ( an umbrella term for money market fund and other types of investments) this compound interest is calculated on a daily basis.
Therefore if you withdraw your money before the agreed-upon period your money will have grown.
To get the daily interest rates to go to the business daily newspaper.
Look for the unit trust section where accredited unit trust companies publish daily closing interest rates.
6 unit trusts in Kenya to grow your money
1. Zimele Money market fund
This particular fund allows you to invest as little as ksh.250 through mpesa.
The yield is as high as 9.36%
Do you remember the fees that I mentioned above? Zimelea has a management fee of 2% per annum and an admin fee of 3% to name but a few.
2. Genghis capital unit trust
With this particular fund, you can start investing with a minimum of ksh. 500
There is an initial fee of 3.5% which includes custodian, fund managers, and trustees fee.
The best part is that you can start investing with them at the comfort of your smartphone by downloading their app from the play store.
Speaking of mobile phones here are a few funds that you can invest in using a USSD code.
With Britam you can invest a minimum of ksh. 1000 using *778#
Here your money can gain interest between 8.5% and 10% per annum.
The interest is earned on a daily basis.
You can recover your money after 2 business days or 48 hours.
With cytonn, you can also invest a minimum of ksh. 1000 and earn interest as high as 11%.
There is also a management fee of 2% per annum.
Cytonns USSD code is * 809#
5. Old mutual
With old mutual, you can also invest a minimum of ksh. 1000 and earn an interest rate of 7%
Their USSD code is *480#
There are other good money market funds in Kenya like that of the equity investment bank.
6. Equity has a minimum investment threshold of ksh.1000.
With equity for short term investments that are investments not exceeding 13 months the interest earned is between 10% and 15%
Whereas for long term investments, that is investments exceeding 13 months the interest rate is between 15% and 18%
Safaricom is already making plans to get a share of this unit trust pie
See the link below to get more information
safaricom to launch unit trust
The punchline, there are so many investment opportunities available.
Do thorough research and start investing today.
Forget about making excuses why not to start investing.
Your future self will thank you for investing today.