It has been a wholesome month of Financial Wellness matters. This rainy cool April morning in Nairobi I am joined by one financial coach and mentor Mr. Fedha Mavuno who will share with us a few tips on investments and how to grow our hard earned money to ensure our financial security.
Kwambie: Hello Fedha. I am glad that you have taken the time to share a few tips on financial investment matters with the readers of ‘Wacha niKwambie Uzima’
Fedha Mavuno: Thank you too for giving me this platform to empower more people on investment matters. To set the ball rolling perhaps I need to begin with a definition of Investment. Investment is a commitment of money or capital to purchase financial instruments or other assets in order to gain profitable returns in the form of interest, income or appreciation of the value of the instrument. Investment is related to saving or deferred consumption.
In simple termsInvestment is all that appertains to making our money grow.
Kwambie: Thank you for that clear definition of investment matters. To be honest, I always thought that investment is saving.
Fedha Mavuno:Saving is not investment. Saving is putting aside money or delayed gratification of use of one’s money for future use. For example one may save to build a house, education or a luxury that one has been eyeing. On the other hand, if one purchases shares, property or high interest earning instruments then that is Investment.
Kwambie: I understand that it is never too late to begin investing one’s hard earned money. What is the importance of investing money?
Fedha Mavuno: Investing is paramount as it help one grow ones money. Rather than stash your money under a mattress you need to grow it to beat the rising cost of inflation by investing in property, shares, mutual funds, t-bills or treasury bonds to grow your wealth.You also need to plan for retirement when your earning capacity will be reduced. Kwambie, over time your money needs to begin working for you and not you working for your money which really is the essence of investment. Finally, investments also act as security against which one can borrow to grow ones wealth.
Kwambie: Lovely. I feel empowered already.
Fedha Mavuno: Not too fast Kwambie, we need to look at all those investment instruments that I have mentioned in detail. Let us begin with the stock market. My sister, do not go with the herd mentality; adopt a sober mind when deciding what stocks to purchase in the stock market. Be disciplined and strive to build your wealth realistically over time. To understand the stock market like the Nairobi Stock Exchange, follow it rigorously and if you do not have the time engage the services of a financial advisor to guide you in making informed decisions.
Kwambie:Land, property, houses are all the rage in Kenya in terms of investment tools, what advice would you wish to give to those who wish to invest in real estate?
Fedha Mavuno: Location, location, location is my first piece of advice.
Kwambie: Uh huh. (As Kwambie squints her eyes as if to understand the concept of Investments better.)
Fedha Mavuno:Invest in locations that appreciate in value and that are in tandem with your future need. Also carry out due diligence; engage the services of a lawyer and valuer to ensure that the deal you are about to invest in is legitimate. Really, you do not want to hear of the number of peoplewho have come to me for financial adviceafter being conned by landsters as I would call them.
Kwambie:Do I have to be extremely rich to invest in property?
Fedha Mavuno: What I can advise you is to begin with what you have. And to answer your question Kwambie, No!. Little by little day by day and before you know it you would have acquired a lot in real estate investment. Furthermore, these days people are combining joint efforts to purchase property at a lower price than what they would have purchased on their own. For example saccos are a good way to begin. Also consider indirect investment in property where people buy into shares of property.
Kwambie: Howcan one make the best us of property that they have purchased?
Fedha Mavuno: Consider purchasing property for your own use and setting yourself free off the shackles of landlords and landladies. Property can also be purchased to lease. Then there are those who purchase property for speculation purchases; that is to sell off in the short term and long term.
Kwambie: One last one question from me on behalf of the readers of ‘Wacha niKwambie Uzima’. What are unit trusts , t- bills and treasury bonds? I keep on hearing these termsrecurring in conversations on Investments?
Fedha Mavuno: Simply put, all are tools for investing your hard earned money. You can invest in a unit trust fund through financial services providers such as a broker; an Investment Management Company or in some cases through your bank.
A unit trust fund is a pooled resource, which means that it allows a group of investors to combine their cash and invest it.
These are all excellent ways to invest one’s hard earned money. For personalized advice Kwambie, I advice you to visit your nearest investment management company, stock broker, banker or personal financial advisor to set the ball rolling for your personal investment management.
Kwambie: Thank you so much Fedha. Indeed wehave all purposed to be on top of our money from this day forth.
Fedha Mavuno: Thank you so much and I look forward to future engagements with the readers of “Wacha niKwambie Uzima’.
Kwambie: So there we have it, readers of ‘Wacha niKwambie Uzima‘ a some information on Investment matters and a wrap to the two months when we focused on Financial Wellness.
Kenya mourns the loss of her former country’s matriarch and first lady, the beloved and revered Her Excellency Mama (Mrs) Lucy Muthoni Kibaki. May her soul rest in eternal peace. My condolences to the family that she has left behind.