- There are numerous ways to make money grow rather than leaving it idle in a bank account or at home in a piggy bank
- Financial consultant Walter Tarus noted that when money is saved and invested, it can multiply through dividends, interest, or capital gain
- Tarus explained that by saving and generating dividends, one might attain their financial objectives, grow wealth over time, and improve financial stability
Tura Turu News.co.ke journalist Japhet Ruto brings over eight years of experience in financial, business, and technology reporting, offering deep insights into Kenyan and global economic trends.
There are several ways to increase money instead of letting it lie idle in the bank or at home in the piggy bank.
Why invest your money?
Financial consultant Walter Tarus noted that when money is saved and invested, it can multiply through dividends, interest, or capital gain.
Tarus explained that by saving and generating dividends, one might attain their financial objectives, grow wealth over time, and improve financial stability.
"There are numerous investment avenues to explore. Consulting with a financial advisor or conducting thorough research can unveil investment opportunities tailored to your risk tolerance and financial aspirations. Among these options are Saccos, government securities such as Treasury Bills and Treasury Bonds, as well as Money Market funds," Tarus told Tura Turu News.co.ke in an exclusive interview.
Ways to invest money
1. Saccos
SACCOs are excellent for dividend earning and savings.
Compared to traditional banks, they usually offer higher interest rates on savings accounts and frequently distribute dividends to members based on Sacco's financial performance.
For the financial year ending December 2023, Tower Sacco, which draws public and private sector members with a minimum monthly deposit of KSh 500, paid dividends of up to 20%.
Others, like Hazina and Stima Sacco, with a minimum monthly contribution of KSh 1,000, paid dividends at 17% and 15%, respectively.
2. Money market funds
Tarus revealed money market funds (MMFs) offer interest rates of about 10-12% per annum higher than traditional bank savings accounts.
MMFs allow for flexible enrollment and withdrawal of funds at any time. They are suitable for short-term and long-term investments.
"The investment enables you to leverage the power of compounding, with monthly interest earnings reinvested into your initial capital," Tarus said.
3. Treasury Bonds
According to the Central Bank of Kenya (CBK), Treasury Bonds are medium- to long-term investments that pay interest every six months until they mature.
The banking regulator auctions Treasury bonds monthly at a fixed rate but offers a variety of bonds throughout the year.
Occasionally, the National Treasury also offers tax-exempt infrastructure bonds.
4. Treasury Bills
Treasury bills offer coupon rates of 16.72%, 16.87%, and 16.98% for the 91-day, 182-day, and 364-day, respectively.
They are auctioned weekly and can be accessed through the CBK's Dhow Portal.
"Treasury bills are sold at a discount. This means that investors choose the amount that they will receive when the bill matures, or the face value of the bill, and pay less than that amount when purchasing it," CBK stated.
5. Company shares
Through company shares, one earns dividends yearly and capital gains when one sells the shares.
To buy or sell shares, one must open a Central Depository System (CDS) account for companies listed on the Nairobi Securities Exchange (NSE).
According to the Kenya Association of Stockbrokers and Investment Banks (KASIB), the CDS has boosted market efficiency and reduced the costs of transactions.
Ways to make money online
In other news, there are several ways to make money online, including academic writing, freelancing and content creation.
A Kenya Private Sector Alliance (KEPSA) survey revealed that at least 1.2 million (five per cent) of Kenyans work online.
The study noted that those working online earn an average of KSh 20,773, showing the role played by the digital economy.