You can invest in the stock market with Kes 5,000 a month. The minimum number of shares you can buy on the stock exchange is 100, hence as long as you are buying shares that are trading below Kes 50, you can invest. There are actually many fundamentally strong companies that are trading below Kes 50 at the moment that you could actually be accumulating ownership in with this Kes 5,000. Let’s use an actual scenario. I have picked one of the banking shares and assumed in the last one year, you had been investing Kes 5,000 per month accumulating this share. In the last one year you would have accumulated 1,800 of these shares. You would have spent Kes 60,000 (Kes 5,000 x 12) in total but the value of your shares would have been Kes 75,000 (after brokerage commissions). Of course past performance is not necessarily an indicator of future performance with shares and you would have to do further research on the particular share you are buying but this goes to show that with Kes 5,000 you can actually activate the process of growing the value of your money.
Pesh Wanjiru: I lost everything in 2008, today I make Sh. 135,000 monthly from my matatu business
You can invest in Treasury Bonds with Kes 5,000 saved for 10 months. The minimum investment in a Treasury Bond is Kes 50,000. You can put aside your Kes 5,000 in a savings account and when it accumulates to Kes 50,000 you simply go and purchase a Treasury Bond. Depending on the rate offered at the time, this bond will pay you some interest every six months.
You can create or join an investment group with Kes 5,000. Do you have 10 friends who can join you in this venture to save Kes 5,000 a month? Being able to pool your money with other people will significantly multiply the impact of Kes 5,000. If there are 10 of you, that means you can put aside Kes 50,000 a month! In a year you can collect Kes 600,000 (as a group). You can buy more shares, you can buy larger property, you can start larger business etc. As a group you can accumulate a significant investment portfolio if you each commit to putting aside Kes 5,000 a month.
Kes 5,000 a month over time is a very significant portion of your Retirement Plan. Kes 5,000 a month saved over 10 years and earning just 10% p.a. will accumulate to just under Kes 1 mn. Do not hesitate to start with or put an extra Kes 5,000 in your pension fund.
You can eliminate your debts with Kes 5,000. Say you had a loan of Kes 500,000 for 5 years and you were being charged 18%. If you put an extra Kes 5,000 towards your repayments you will pay off this loan in 3 years instead of 5 and save Kes 100,000 in interest costs in the process.
I could go on and on. This is just simply an introduction to what you can do with Kes 5,000. When you start taking notice around you of what can be done, more and more ideas will open up. I know people who have started poultry farming, vegetable trading, catering and various other ventures with this amount of money. Remember that a bird builds its nest one twig at a time. The nest just doesn’t appear. Let that Kes 5,000 be your first twig.
Waceke runs a program on personal financial management. Find her at [email protected]
