Investing is a great way of building your wealth and ensuring financial security in the future in the case of early retirement. It also gets you ahead of inflation fears and propels you towards achieving your financial goals on time – if it is a good investment.
But where can you invest your money? Let’s say you have Ksh1 million right now in Kenya.
Whether you are a starter or a seasoned investor, I bet you have been battling a war of nerves trying to figure out the best investment ideas without making any bad decision that will lead to the loss of your money.
Before sinking your money into any of the schemes that you have been giving a thought to, make sure you know the end goal and the purpose for your investment, figure out if the money you have is sufficient for a particular investment option, and if you will handle all the drawbacks in the fast-paced finance sector where portfolio value can depreciate in no time.
Here is how you can invest Ksh1 million and make a profit out of it:
Invest in treasury bills and bonds
Treasury Bonds and Bills are two different good investment instruments. A Treasury Bill is a short-term debt obligation issued by the National Government through the Central Bank of Kenya (CBK) as its fiscal agent. It has a maturity period of less than a year at 91, 182, and 364 days.
Who can invest in Treasury Bills in Kenya? Residents, foreigners, and corporates can invest in Treasury Bills so long as they have an account with a local commercial bank or a Central Depository System (CDS) account.
The minimum you can invest in Treasury Bill is Ksh100,000, and preceding top-ups should not be less than Ksh50,000.
Treasury Bills guarantee high returns as it has a higher rate of 7.5% to 9.5% calculated with respect to its maturity dates.
On the other hand, Treasury Bonds are long-term bond security with a maturity period of 1-30 years. It is a good investment for those inching closer to retirement or young investors who want stable returns.
The types of Treasury Bonds in Kenya are; Fixed-Coupon Rate Bonds, Zero Coupon, Floating Rates, Infrastructure (project-specific), Restructuring or Special bonds, and Savings Development bonds. They are issued on a monthly basis.
Who can invest in Treasury Bonds? Residents, corporates, and foreigners who have a CDS account or an account with a local bank can invest in Treasury Bonds.
The minimum amount to invest is Ksh50,000 or its multiples except for Infrastructure bonds, whose minimum face value is Ksh100,000. It has an average interest of 8% on a specific maturity period.
Treasury Bonds investors have the flexibility of trading their shares through the Nairobi Stocks Exchange (NSE) when its prices become favorable.
Invest in the money market and other unit trusts
A money market fund is a mutual fund that invests in highly liquid short-term debt securities with a high credit rating, such as Treasury Bills, and pays out dividends at the end of its fiscal year or monthly, depending on the policies of the fund.
It usually has a high-interest rate of 8-10%, and Ksh1 million is a healthy chunk of money to invest.
For instance, let’s say you invest Ksh1 million, and it accrues an annual rate of 9.5%. You will have a profit of around Ksh90,000 in interest – it’s a good choice of investment.
Currently, the money market fund with the highest rate in Kenya is the Cytonn Money Market Fund, with a daily yield of 10% and an effective annual rate of over 10.5%.
The minimum amount of money you can invest with a money market fund in Kenya is Ksh100.
Some of the money market funds in Kenya are; Zimele Money Market Fund, Sanlam Money Market Fund, Nabo Africa Money Market Fund, Apollo Money Market Fund, Madison Money Market Fund, NCBA Money Market Fund, ICEA Lion Money Market Fund, and GenCapHela Imara Money Market Fund.
You can always withdraw money at a money market fund anytime, warranting convenience in case of emergencies.
Buy land for speculation
Land speculation is just a type of real investment, but the difference is that land held for speculation is not added value by developments but only sold the way it was acquired.
Land has always been a good investment since it appreciates over time, but the appreciation rates depend on several factors such as location. Land bought closer to an urban area is likely to increase in value rapidly because of the demand for expansion than those in a rural setting.
With Ksh1 million, you can buy plots in areas such as Nanyuki, Eldoret, Kisumu, or other towns, which are currently witnessing a wave of rapid developments mostly in the real estate sector.
But before buying a piece of land, make sure that it is only a few hours’ drive from the nearest town, note the impending developments within the region, such as roads and water projects, and ensure the land’s terrain is suitable for any development.
Invest in cryptocurrency
Cryptocurrencies are digital assets that can be traded almost everywhere in the world since it has no central monetary authority but are only guarded by blockchain technology which ensures the transactions are conducted safely.
Is cryptocurrency investment lucrative in Kenya? Yes, so long as you have a strategy in crypto trading and purpose for your investment, especially for long-term investors. You should be able to decipher between original and fake crypto traders to avoid losing your hard-earned money.
You should also invest the money you can afford to lose because crypto market rates fluctuate, and one may end up trading on a loss.
Additionally, you should opt to invest in more than one cryptocurrency in case the other crypto types plummets in value. There are a variety of cryptos to choose from; Bitcoin (BTC), Bitcoin (BTC), Tether (USDT), Tether (USDT), USD Coin (USDC), XRP (XRP), Solana (SOL), Terra (LUNA), Cardano (ADA), TerraUSD (UST), Binance USD (BUSD), and Dogecoin (DOGE).
Long-term investors have the advantage of evading panic selling when crypto trading rates fall dramatically and, in turn, make huge profits when markets return to a good trend.
Investors are also advised to use trading bots which usually take advantage of pounding rates to automatically purchase crypto at a cheaper value.
You can buy crypto directly by visiting your desired crypto website or trade via third-party marketplaces such as AvaTrade, Capital.com, Eightcap, Admirals, BDSwiss, and IC Markets.
The most expensive cryptocurrency is Bitcoin which costs an average of ksh3,435,600 per bitcoin – subject to change based on prevailing market rates. With Ksh1 million, you can acquire approximately 0.000034 BTC.
You can retain this investment until the market rates are fine and sale at a profit. This is achieved by in-depth market analyses and understanding of hedging and HODL bitcoin strategy.
Invest in stocks
The stock market is one of the avenues that may lead you to financial success through wealth creation.
In Kenya, the stock market is regulated by the Nairobi Securities Exchange (NSE), which allows trade in Equities, Bonds, and Quasi Equity products.
It has 63 listed companies from all sectors of the economy, such as agriculture, media, telecommunication, manufacturing, and banking, which are considered public companies, and anyone with a Central Depository System account can buy shares from them.
With Ksh1 million, you can buy shares from any public listed company because many have a minimum share purchase of 100 shares. If you are a newbie in the stock market, you will need a stockbroker to take you through the process of buying shares.
Consider purchasing stock of a less risky portfolio such as Exchange Traded Funds(ETFs) and Real Estate Investment Trusts (REITs).
As an investor, after buying a company’s stock shares, you look forward to seeing the growth of the company to become more valuable in order for you to make more profits when you sell your shares.
The most valuable company listed in NSE is Safaricom PLC, with an asset base of over Ksh1 Trillion.
Start a business
A million shillings is good money to start you off almost in Small and medium-sized enterprise. Kenya is an agricultural country, and you may invest it in farming by leasing land for a short period of time and planting crops such as maize or wheat because they are in high demand.
Also, if you are in an urban area, you can open a hotel, start a fashion business or open an electronic shop dealing with imported gadgets because they are usually cheaper.
Invest in yourself
The best way to invest in yourself is through education. With a ‘capital’ of Ksh1 million, you can upgrade your learning to a diploma, degree, or master’s level. This will give you a better chance in the job market as you are likely to be hired as an expert in your field of study.
A good job means a good salary and a nice life.