This archive report was first published on 5 August 2020.
With the Covid-19 pandemic forcing us to adapt to a new reality, investing in the 'new normal' has become a pressing concern. As we navigate this uncertain landscape, it's essential to make informed investment decisions.
One option is to invest in Treasury bills and bonds, which are controlled by the Central Bank of Kenya (CBK). To do so, you'll need to open a 'CDS account' with the Central Depository and Settlement Corporation (CDSC). Treasury bonds, in particular, offer a medium- to long-term investment opportunity, with interest paid twice yearly and a withholding tax levied by the government.
These bonds are advertised monthly on the CBK website and can also be traded on the Nairobi Securities Exchange (NSE) as a secondary market. They're a risk-free investment option that offers good returns to pension funds, insurance companies, and commercial banks who invest clients' money.
However, it's essential to note that the devaluation of the shilling and inflation can impact your investment. To mitigate this risk, consider opening a US dollar account, as the 'greenback' is generally more stable than the shilling. This applies to Treasury bills as well, which are short-term investments with maturities of 91, 182, or 364 days.
Shares, on the other hand, are not for the faint-hearted. Share prices can be volatile, and it's essential to start with companies that have a history of stability and growth. The local telecommunications industry and snack and beverage companies are potential gems, given the increased demand for virtual services and online shopping.
When trading in the NSE, it's advisable to work with a stockbroker. You can find details of all the brokers on the NSE website and open a CDS account with a broker who has an online or mobile platform. From there, you can give instructions on when to buy or sell shares and at what price.
Alternatively, you can open an account with the CBK, which requires a minimum deposit of Sh50,000. This investment option requires hands-on research and informed decision-making, as projections and speculations can significantly impact your returns.
Real estate, on the other hand, is a solid investment option. In Kenya, land is highly valued, and you can grow crops, trees, or build structures on it, which can appreciate in value over time.
Dr. David Turuthi, an educational communication and technology expert, advises against investing in Money Market funds (MMF) and interest-earning savings accounts in banks, citing high transaction costs and low returns.
