Tuesday, March 19, 2024

Handling your finances in a politically charged season

The current political upheavals have not been kind to the pockets of many. One of the most common complaints across the political divide is the shortage of business and low flow of cash and investment opportunities. This isn’t far-fetched. In the first quarter of this year, the economy grew by 5 per cent compared with 6.3 per cent recorded in 2016. The dye, though, is not cast! There is still plenty that you can do to safeguard your investments as well as steer your money towards wealth creation. “Building wealth is a full time endeavor regardless of the seasons,” says financial expert and CEO of Rich Management Aly Khan Satchu. Here’s what to do currently:

Investment opportunities: Look out for the existing investment opportunities. “There’s a full tray of investment options you can take that will start to appreciate once the economy stabilizes and begins to recover after the electioneering period,” says Samuel Gichohi, the Business Development Manager at NIC Securities Limited. “If you have some money stashed away, you should be investing heavily now.” On the Nairobi Securities Exchange, Mr. Satchu points out that Safaricom, Standard Chartered Bank, Kengen, and KenolKobil are some of the stocks that you may put your money on. “Safaricom is at an inflexion point and is set to seize an e-commerce opportunity as well as expand geographically. Kengen is seriously inexpensive while Standard Chartered and KenolKobil are currently solid for picks for those with good cash,” he says.

Don’t panic: Following the nullification of the presidential vote by the Supreme Court, investors at the Nairobi Securities Exchange lost over Sh. 10 billion in a panic-induced sell off that led to temporary suspension of trading. Never embark on a panic sell off if the fundamentals of the investment you have made of the business you own are strong. “The market doesn’t follow politicians and governments. Focus your attention on the speed at which you are financially reacting to real time information,” says Eric Solis, a member of the Forbes Finance Council. This is echoed by Elle Kaplan, a self-made millionaire and the author of Love the Hustle. She notes that historically, markets and businesses will always tend to recover from political upheavals. “If you’ve invested to reach long term goals, do not be swayed by temporary economic and political volatility,” she says.

Loans and defaulting: Currently, auctioneers are having a field day as the number of loan defaulters rises. The most affected have been people in the small and medium enterprises (SMEs) category. “The SME category is at the bleeding edge of the economic slow-down. SMEs have been forced to deleverage and for them, it is all about cash-in-hand and liquidity,” says Mr. Satchu. He notes that one of the easy ways to avoid the hammer if you’re currently struggling with a bank loan is to keep your bank abreast on your predicament. “The most powerful lesson I have learned in these circumstances is to keep talking and engaging with the banks,” he says.

Insure your business: There is a lot of collateral damage that spirals from political upheavals. “Invest in an insurance package for your business. You do not want to wake up and find your outlet looted, vandalized or razed down,” cautions Nairobi-based personal finance expert James Njenga. Currently, insurers are offering among others the political risk and political violence covers. “You may also consider taking policies for your key possessions, assets, personal accidents, health, and life,” he says.

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