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A Nakuru-based man has shared his retirement saving journey over the past five years while asking for advice on the best investment vehicles that will enable him to achieve his goal faster.
The man identified as Juma revealed that his goal is to save Sh10 million in 15 years, to guarantee him financial security after retirement.
Over the past five years, Juma revealed he has been saving Sh15,000 monthly in a Sacco, which now totals Sh900,000. While Sacco has been helpful in his savings journey, he still feels like moving the money to a retirement scheme would have more benefits.
“I have been keeping this money in a sacco account but I read somewhere that having a retirement scheme may be better. But reports I have read online suggest that the returns are very low. Given the volatile market, I’m concerned about the future. What adjustments should I make to my contributions or asset allocation to reach my goal of Sh10 million in 15 years?” he stated on a post shared on Money254.
Expert’s advice
Responding to the matter, Margaret Njeri, an IRA-accredited financial advisor and wealth coach advised him to increase his monthly contributions to Sh22, 500 to meet the goal at a 10% annual return or diversify savings to include higher-yield options like endowments,government bonds or balanced funds for better returns.
“Current Plan: Saving Sh15,000/month for 15 years at a 10% annual return (typical SACCO rate) will yield approximately Sh6.5 million, short of the Sh10 million goal,” Njeri observed.
According to her, while Saccos offers moderate returns and access to affordable credit, they lack the tax benefits or structured growth of retirement schemes.
“Retirement Schemes provide tax relief and professional fund management, making them suitable for long-term goals,” she stated.
She further recommended Money Market Funds (MMF) for short-term savings goals and government bonds for long-term goals.
“Government Bonds provide higher, stable returns and are ideal for long-term goals. Consider bonds with interest rates of 12–15% annually. Remember that the rates might go down depending on factors influenced by broader economic conditions and global financial markets,” she noted.
She advised Juma to combine Sacco savings with endowments and government bonds for stable returns and retirement schemes for tax benefits.
