Investing Tips For Beginners

Investing is setting money aside into financial schemes, shares or stocks, property, or a commercial venture with the expectation of a return. The return could be dividends, tax benefits, interest, and improved liquidity, among others.

You can also invest for a foreseen future expense or need like owning a dream house or a car, savings for retirement or your children’s education.

Based on your income levels, risk appetite, and investment goals, many investment options are to choose from. Some of them include;

  1. Cash Deposit in a Sacco/bank

Setting cash aside in an investment account is considered a low-risk type of investment, which is an excellent place to start. Money set aside in savings account and investment accounts earn you premium interests, and you need not worry about losing your initial investment.  The deposits are also readily available in case of an emergency, unlike other forms of investment.

  1. Investing in stocks

Stocks are “shares” bought in a particular company/ organization. As a shareholder, when the company/ organization makes money, you also make money, and when the company increases in growth, the value of your shares grows as well.

Shareholders can also receive dividends if the company chooses to distribute earnings.  

Take Note: Warren Buffett became a successful investor by investing in stocks, so can you! 

  1. Agribusiness

Our Country is heavily dependent on agricultural products, so the farming business presents an excellent investment opportunity. There are different options: an incubator for egg production, manure production, greenhouse farming, rabbit and poultry farming, among others.

  1. Treasury Bonds

Treasury bonds are a secure, medium to long-term investment that typically offers you interest payments throughout the bond’s maturity every six months. The Central Bank auctions Treasury bonds monthly but offers various bonds throughout the year, so prospective investors should regularly check for upcoming auctions.

Most Treasury bonds in Kenya are fixed-rate, meaning that the interest rate is for the entire life of the bond.

  1. Real Estate 

There are various ways to invest in, i.e. homes, business buildings, apartments, farms and plants/ factories. Property such as buildings for business operations, land, and homes are often expensive investments, which turn down investors with less capital. 

You can make money by buying property at a below-market rate and selling it at a relatively higher price, as well as by renting or leasing the property to tenants.

Simple Investment Tips;

  • Invest now – there’s no best time to invest. Start as soon as you can.
  • Know your investment – research on the form of investment before venturing into it. Understand the expected gain versus the costs, possible risks, how well an option meets your investment goal etc.
  • Spread investment– Having an investment mix will help you meet your short, medium and long term investment goals. Investing in real estate is good, but you need investment deposits that the investor can withdraw to complete a short term need like medical bill, boost business stock etc.
  • Value investing – this strategy is highly known today and was created by warren buffet. I.e. buy stock cheaper than it should be. Buying stocks requires much research into the fundamental of the underlying companies.
  • Do not bite more off more than you can chew. Grow your investment over time at your pace.
  • Do not take “bad loans” in the name of investment.
  • Diversify your investments to minimize risks. Diversification entails investing in more than one asset, E.g. real estate and infrastructure projects; you can invest in dairy farming and supplement it with another cash crop while investing in real estate, invest in stocks, bonds and at the same time in agribusiness.

“Only buy something you would be perfectly willing to hold if the market shut down for ten years.” Warren Buffet.

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