WHICH INVESTMENT IS BEST FOR YOU?

How are you? Mentally, financially, and generally how are you in these very uncertain times that we find ourselves as KE?

Happy New Month and may August bring with it great tidings your way

Today, let's look at one of the major questions I get from personal financial planning clients: which is the best investment I should consider with X amount of money?

In all honesty, this question doesn’t have a direct answer and if it attempted the answer would be misguided at best or insufficient at best

The best way to know which investment suits you the best is not from how much money you have to invest but by asking yourself WHY you want to invest. When you answer this it guides you on the risk exposure that you are willing to take with your investment.

For instance, if you want to be able to buy an asset like land, a car or even build and you want to achieve in maybe a period of 12 months it would be wise to understand the rough estimate cost that the project will cost, after that, now consider how much you can be able to put away on whatever intervals that work best for you, could be monthly, if that money can finance your project fully within that time frame then you can the money in low-risk platform that will take care of the inflation even if no much gain will be earned, (this is because your goal is not revenue generation but safe hold of your money from loss or inflation) however, if after doing that calculation you realize that the money you will have put aside is half the cost of the project then you need a different vehicle for you to be able to actualize you goal, in here you can consider a platform that will give you a multiplier effect of your money and at a friendly interest rate, and in this case then a Sacco might be go to option, for this option if you are not a member of a Sacco then this brings in another question of which is the best Sacco to join, and on this you have to understand how Saccos work, meaning you will need to either know people who are members to help guantee you, or read the terms of whatever Sacco you are considering on Asset financing (as in most cases for asset financing you may be able to leverage the asset being purchased and your monies in the Sacco to act as a guarantee) the one thing I tell people is before you join a Sacco avail yourself for one of their AGM and listen in you will learn a lot about the management that the financial statement will not tell you and this is important to consider before joining a Sacco as this are the people who manage your money hence determine the performance which determines your dividends as well as the interest rate that you get.

Another major question that I have noticed has been coming up, is life insurance necessary? Or I can put the investment in other high-yielding investment platforms that can earn me better returns. My best answer to this is again WHY are you considering life assurance? One thing we all is that tomorrow is not guaranteed for any of us, and this is the uncertainty that Life Assurance tries to cover so from where I sit I normally ask, what are the premiums you need to pay and on what intervals for the life assurance and in the event of death what will the beneficiary stand to gain and in what time frame is this being considered with VS the alternative high-yielding platform on what timeline and how feasible is each when the two are considered with numbers as well timeframe of each then go ahead and make a decision which is based on facts and not a hypothesis.

Does the above mean that whatever option one goes for is risk-free? ABSOLUTELY NOT the goal is not to eliminate risk but to mitigate it and or reduce the exposure as much as possible

Ripple Effect        

Before deciding which investment vehicle to go for start at WHY are you considering an investment option, WHAT’S the goal? WHERE do I want to land? Then ask yourself which option will get you at your desired destination on time and with the convenience you desire. Then go into the market and search for the best offer available for you, do not make an investment decision in a hurry and most of all never start an investment decision from what the market is offering or the monies available to you for disposal, however, if and when you have some monies available to you but don’t have an idea of where to place it, research a money market fund that is well performing in the market and that is reputable take it as a holding account, then now get on your decision making hat on and decide what investment you want to undertake give yourself a timeframe for this period and then make a decision. Current/savings bank accounts are not investments, not making an informed investment decision and hoping to reap positively is like closing your eyes while crossing a highway and hoping not to get hit