10 investment opportunities in Kenya - How and where you can save and invest money (2024)

If you want to be in a better financial position tomorrow, then you need to start saving and investing early in life. There are many knowns & unknowns in life that one needs to be prepared for financially like; rising inflation, supporting your family, retirement, and unexpected emergencies.

Investments if done properly can help you prepare for most of those and make you strong financially than you are currently.

The earlier one starts saving and investing their money, the better it is in the long run. Wealth takes time to accumulate, so one should explore investment opportunities that are available and plan accordingly.

There are variety of investment options available for investors today depending on return on investment, risk profile and term. Some of these investments are complex and some are simple to understand even for a layman.

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There is a lot of financial and investment advice that is available on the internet and other sources. The decision on where to invest your money should always be based on your independent judgement, after considering all risk factors, keeping your own financial position and goals in mind.

We take a look at some of the popular ways you can invest your money in Kenya;

1. Community/Collective Savings

Table banking or collective savings is a great way for any investor to grow their savings. In a table banking scheme, you join hands with other individuals and households and pool your money in a common fund. Members of the scheme can borrow money from the kitty at a certain interest rate.

The fund will keep growing as new members enter the pool and from the interest earned from the loans given out. This scheme not only allows you & the community to save money, it also provides return interest.

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This method of banking is growing in popularity in Kenya under the auspices of the Joyful Women Organisation.

2. Saving and Deposit Options at Your Bank

Every leading bank in Kenya has a variety of savings and deposit options. There are several options available, so you need to carefully pick a way that suits your needs.

Some of the common ways in which people save/invest their money is to open a fixed deposit or recurring deposit account.

You can also simply open a savings account and collect interest on the balance that you hold. In Kenya, banks usually offer an interest rate of up to 5 percent per annum.

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The main reason for saving your money in a bank is because they offer guaranteed returns and carry a very low risk. Ask your local bank about the savings and investing options that are available with them.

3. Invest Money in Yourself

A good way to invest is to invest in your own future growth and expansion. If you have a business or a business plan, then you may consider investing money in it.

If you are a freelancer, then you may consider investing in online or skill-building courses and sell your services online at platforms like Fiverr or Upwork.

You can also consider starting an online business, because an online business is cheaper to set up.

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You can take part in E-commerce by selling products or services online. Almost every type of product is now sold online. There are many platforms such as Jumia.co.ke, Amazon FBA, Wix, or Shopify which you can use to sell online & earn money.

4. Buy Government or Private Sector Bonds

A Bond is a way in which the Government or Corporations borrow money from the public. A bond usually has a time-period. Once the time period is over, you get your money back along with a certain amount of pre-agreed interest.

Kenya offers treasury bonds that have a repayment period that can range between one to thirty years. These bonds can be quarterly, semi-annually or annually in nature. The amount of interest that you can earn from these bonds depends on the time period and the amount of the bond. One such bond is M-Akiba available at NSE - you can start investing as low as Ksh3000 and can get 10% annually.

Instead of saving money in your bank, you may consider investing in Government bonds because they are safer and offer a higher rate of interest.

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5. Invest in Unit Trusts or Mutual Funds

A Mutual Fund is a pool of money gathered from several investors. They differ from table banking in several ways, the most basic difference being that Mutual Funds are much larger in size and are regulated by the Government.

A mutual fund manager or company takes your money and invests it in ways that offer it a higher rate of return. There are two types of mutual funds, these are open-ended or close-ended mutual funds.

In an open-ended mutual fund, you can buy and sell units at any time you want. The price of the units depends on market values. In a close ended mutual fund, you have to commit your money for a certain period and you cannot withdraw your money before the maturity date without incurring a penalty.

Mutual fund investments are risky as they are subject to market fluctuations.

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6. Invest in Gold and Silver

If you want a safe investment that provides moderate levels of returns over a period of time, then you can consider investing in precious metals such as gold and silver. Gold and silver usually appreciate in value over a long period of time.

They are also considered safe because they do not depreciate a lot in value even during times of market volatility.

Investing in gold and silver is one of the most popular ways for individuals to invest their money and considered as safe haven by many large investors. You can invest any amount of money in precious metals. These investments are considered to be safer when made for the long term.

7. Invest in the Capital Markets via NSE

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The Nairobi Stock Exchange or the NSE is a way for the public to invest in financial products. There are several different financial products that you can invest in such as Shares, Bonds, ETFs, REITs, Derivatives, and so on.

Each type of financial instrument carries its own risk. You need to understand how each financial instrument works before investing any money into it. Remember that investments in financial instruments are always subject to market risk. Hence, it is possible for you to lose money instead of gaining it.

You can trade these instruments through a NSE broker.

8. Invest in Real Estate

Real estate is a very common method of investing money. However, traditionally investing in real estate was outside the capabilities of most individuals. In recent times, instead of buying property outright, we can invest in the growth of the real estate market through Real Estate Investment Trusts or REITs.

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You can invest in an REIT with sums that are much lower than what is needed to buy a piece of property. You can also exit your investment depending on the terms of the REIT.

Real estate investments may offer good returns if market prices are up but you may also lose money.

9. Peer to Peer Lending

Peer to Peer Lending is a way for you to invest in the growth of your local businesses. In this method, a small circle of friends or investors can invest in businesses in return for a share of the profit.

This is a popular vehicle for investment in the US and is catching on in Kenya.

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10. Alternate Investments

If you have a higher risk appetite, you can consider investing in alternative investment instruments. There are several such instruments that offer a high return but are also highly risky.

These financial instruments include commodity futures, OTC derivatives, CFDs, forex trading, and cryptocurrencies.

Equity Derivatives can be traded on NSE Next while Commodity & Forex derivatives are available as CFDs or Complex derivatives at major forex brokers in Kenya like FXPesa, Pepperstone and EGM Securities.

Before investing in any of these products, you need to understand how they work. Always educate yourself about the subject before making any investments.

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TIPS FOR SAVING AND INVESTING MONEY FOR BEGINNERS

1. Make a budget – A budget tells you how much you are earning, what your expenses are, and how much you can save. This basic information can be used to decide your financial goals.

2. Save Money Where You Can – You should always have a mindset of saving money. Look at your expenses and try to cut as many of them as you can to safeguard your financial health.

3. Use Saving and Budgeting Apps – These apps are a great way for you to keep track of your expenditure. These apps tell you where your money goes so that you can better plan your expenditure.

4. Know the Risks – Before you make any investment, you need to understand the risks of that investment. Remember that there is always a risk associated with every kind of investment.

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5. Never Invest more than You Are Willing to Lose – Since there is a risk involved with every kind of investment, you should make sure that you never invest more money than you are prepared to lose.

6. Set a Realistic and Achievable Target – Don’t overstretch yourself when it comes to your financial goals. Always make realistic goals in accordance with your income levels.

7. Always invest long term – Instead of making speculative investments in market, you should target long term returns. Long term investments are usually safer than short term ones.