Kenneth Kaniu is the chief executive officer of Britam Asset Managers (BAAM).
The power of compounding: Through the years, I have learned that you must start building wealth as early as you can. When you start investing early and keep the discipline throughout, you will ultimately subject your investments to the power of compounding that sees your investment multiply and grow faster.
Pay yourself: When you receive a salary or any sort of income, you should always pay yourself first. This means that whenever you get your salary, you should always put something aside that will go towards savings or investments. This will come in handy especially in either meeting big financial obligations or retiring. Personally, I have managed to do this through working with a financial advisor who keeps me on check and also through strictly sticking to my set out budgets.
My biggest lesson on losses: I always have a stop loss measure. This is something everyone should adopt. If an investment drops beyond a certain level, you should just cut your losses and sell. I have learned that this will prevent you from being sentimental about investments and clinging on to investments with the hope that the prices will correct and improve at some point.
Top investment opportunities: The stock market is the place people will make money. This is because current cheap prices offer good entry points. However, I have observed that most people will get it wrong because of impatience and urge to make quick gains. You must have a long-term horizon to make it, and investing in unit trust will be ideal now.
Making money with assets: The key is to look out for assets with solid fundamentals that are trading at a discount to their true value. However, you must understand that assets take time before their strong fundamentals can converge with the market sentiment and make returns. Nonetheless, you will need to strike a balance between assets and liquid cash. You cannot have all your wealth in assets form. You’ll miss out on money making investments.
Hacking insurance: I have learned that before you take an insurance policy, you must first plan ahead. For instance, you should pause to ponder if it is your children’ education you want to safeguard, in which case an education policy will be ideal. Don’t take a policy before planning ahead.
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