What to think about when investing in 2020

1.       Start immediately to benefit from the magic of compound interest

Avoid delays. When you start immediately, you take advantage of time and compounding interest. When you start early you can start with small amounts which you can start increasing as time goes by. You have to first create the saving habit. Once you learn to live without Sh1,000, you can learn to live without Sh2,000, then Sh3,000. Start where you are as there is no amount of money that is small. When you get money, save first then spend. Most people do the opposite by spending then saving what is left over. If you can deduct it from the source, the better. If you are a salaried person, you can deduct it before you receive your salary, through a check-off system. If you are in business you can do a standing order. It gets to the account and is picked, so what remains is your money.

Compound interest is basically the eighth wonder of the world. When you put in money and it earns interest of say, 10 per cent, the interest that you earn is re-invested. The more you re-invest, the more you get. For instance, if you decide today to save Sh2,000 consistently for the next 20 years, if the interest is at 10 per cent, you will have saved sh480,000. If you compound it, you will get another Sh706,000 as interest. So if you are in a Sacco, don’t eat your dividends. Re-invest it and you will see your money grow fast.

  Stella Chepng’eno, a personal financial consultant and corporate trainer

2.       Invest in stocks

If you get a bit of capital, invest in the stock exchange. Start with at least Sh50,000. You only give the money to the stockbroker; they trade for you and give you the profits later on.

Once you give out your money, you become a sleeping partner and the company becomes active. Later on, you get profits and dividends. The initial capital you gave, which is your money, is protected.

Nowadays there are regulations from the CMA and the NSE that protect shareholders in case a company goes under.

If you want to start from scratch, approach any stockbroker for advice. We depend on them for whatever we do; buying and selling.

Nowadays they are found within banks, which have taken over stock broking through subsidiaries and it is the best way because they keep money and cannot be broke.

If the stockbroker is weak, the bank supports the brokerage side with its own money, unlike before when it was done by companies owned by individual people who would sometimes lose money. Banks have departments to advise you and departments of selling and buying.

    Alois Chami, Veteran stock exchange investor

3.       Consider investing in Agri-value addition (Agribusiness)

The Kenyan economy is essentially agri-based. If you look at every home; urban or rural, there is the consumption of agricultural goods. Demand for food will always be there as the population increases.

Agri-business is, therefore, one of the biggest business ideas in Kenya. You cannot go wrong if you add value to agricultural produce and sell it. For example, instead of just selling milk, you could sell maziwa mala, yoghurt or cheese. It is also advisable to put your money in greenhouse farming instead of rain-dependent farming. Greenhouses are reliable because of drip water supply either from small, managed dams or borehole water.

  Peter Wainaina, a financial and investment consultant

4.       If investing long-term in real estate, get a map of upcoming developments

There is a map that is easily available and that you can also get online, which shows you all the roads in Nairobi, the ones that are to be built and upcoming bypasses. Get government plans and those of other agencies that are involved in Vision 2030.

Those plans will tell you exactly where the railways are coming, where the highways will be done, where roads will be expanded, where bypasses will be built and where universities will come up. So you can always tell what the government is planning in terms of road development.

Real estate investment companies do all that research for their properties in addition to finding which roads will be taking priority, this is also an option you can use.

  Reuben Kimani, CEO, Username Investment Ltd

5.       If you are a rookie, stick to registered and licensed investments

Most unlicensed investments are generally intended for investors with enough income that they can afford to make mistakes. If you’re an average investor and are offered an unregistered investment, it’s a warning sign that you need avoid it. Such investments do not have to abide by the laws and regulations that protect investors investing in publicly-traded stocks or bonds; and or are mostly regulated by Capital Markets Authority. So unless you’re a professional investor, consider sticking to traditionally regulated securities. Again, if anything goes wrong with the investment, you have no recourse to turn to.

  Stephanie Nguku, CEO and Founder of Upscale Consulting

6.       Do not rush into new investment opportunities

A lot of people tend to rush into new hot things for fear of missing out on quick returns. Recently, it was the cryptocurrencies like bitcoin. Then there was a burst bubble and value went down by more than 75 per cent by end of 2018. Once you have an investing plan that suits your needs, try to stick to it. Don’t only look at the returns, look at the risk. Understand the risks properly, don’t just invest because of the promise of higher returns.

  Caleb Mugendi, an investment analyst at Cytonn Investments