how to invest 100k in Kenya

How to Invest 100k in Kenya: 6 Best Proven Opportunities

In the current tight and continually evolving market, making wise investment decisions is necessary to ensure your financial security for the future. If you have KSh 100,000, you are at an advantage as you can start your journey to pave the way for your economic growth. This blog post unveils different ways on how to invest 100k in Kenya. Keep reading to find out more.

The key is to put the right strategies and determination into work to make the amount stable for accumulating wealth and realizing your long-term financial goals. There are examples of billionaires that have created huge multinationals with their own hands from scratch, like Peter Munga, the Equity Group founder who founded the 2nd strongest banking brand in the world today with a capital base of KSH 5,000 in 1984. This implies you can create an empire from its roots with Ksh 100,000 in the bank.

However, before delving into the investment options, it’s essential to understand the fundamental principles of successful investing: specialization, risk management, and the ability to wait. Diversifying your portfolio into various asset classes is an effective risk management tool that can be used to maximize your returns. Furthermore, it is vital to have a long-term view and avoid succumbing to quick-decision tendencies to be successful in the investment.

The following are the different investment opportunities: We break down for you how to invest 100k in Kenya These have good returns and low risk. Moreover, we will present you with a beneficial tool that will help you visualize the increased growth of your investments.

Stay tuned!

1. Government Securities: Safe and Steady Returns

how to invest 100k in Kenya

There are several safe investments in Kenya for 100,000KES, one of them being government securities, which include Treasury Bills and Treasury Bonds. The government backs up this kind of investment with minimal risk while guaranteeing steady returns.

T-Bills, which are short-term government securities, come in three maturity intervals. The first is 91 days, the second is 182 days, and the third is 364 days. As of April 2024, the rate on 91 and 182-day T-Bills stands at 1.733% p.a and 1.86% p.a., respectively, while the rate at 364-day T-Bills is at 1.53% p.a. These rates are subject to change depending on market forces.

To buy T-Bills, you must open a Central Depository System (CDS) account with the Central Bank of Kenya or go to a commercial bank of your choice. However, the investment amount for T-Bills is about Ksh 100,000, the minimum amount.

In contrast, Treasury Bonds are long-term government securities, where the maturity date spans from 6 months to 30 years. These securities can provide higher returns than Treasury Bills, but higher risks exist. For now, the yields on the 6-month-1-year-2-year-5-year-and 10-year Treasury Bonds are 16.868%, 16.531%, 17.701%, 19.021%, and 19.397% p.a respectively, according to the financial information as of April The amount of interest is paid twice a year. However, the minimum investment in T-Bond is KSH 50,000, but you can invest in M-Akiba at just KSH 3,000. M-Akiba is a mobile-based platform that enables investors to buy government bonds starting with KSh 3,000. This app is cross-functional with mobile money services and is an easy-to-use option for retail investors.

Related Read: How to Invest in Bonds in Kenya

2. Savings and Credit Co-operative Societies (SACCOs)

how to invest 100k in Kenya

SACCOs have been the leading investment option for Kenyans for many years, with higher returns, affordable loans, and a feeling of belonging characterizing them. By joining a SACCO that is run well, you can use your KSh 100,000 to gain from the dividends of the organization and also take a loan from it.

Most SACCOs are allowing you to borrow up to thrice your savings. This is meant to make credit accessible at a low cost. Furthermore, SACCOs issue dividends to their members after each year. These dividends could be a good passive income for the SACCO members. While selecting a SACCO, thorough research should be undertaken to ascertain the organization’s stability, its management efficiency, and the payouts it has been making. Lastly, a SACCO should be regulated by the Sacco Societies Regulatory Authority (SASRA).

The highest Saccos performers in Kenya returned 10% to 21% dividends in 2024. For instance, Police Sacco accounts for 17%, followed by Stima Sacco, which is 15%; Tower Sacco stands at 15% while Hazina Sacco is 17%. Moreover, SACCOs offer a better return on deposit rate than banks (which have a record high of 10.1%). For example, Tower Sacco provides 13% interest on deposits, while other SACCOs, such as Police SACCO, offer an 11% interest rate.

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3. Savings and Investment Accounts

how to invest 100k in Kenya

Another low-risk strategy is staying and putting money in savings and investment accounts offered by commercial banks. These accounts serve not only as a store of your money but also as a source of interest earnings on your deposits.

Bank Savings Accounts

Most commercial banks in Kenya offer savings accounts with interest rates ranging between 2% to 8.5% p.a.; this depends on the type of account and its balance. These accounts are suitable for short-term saving purposes or as a temporary home for funds intended to be invested differently.

Fixed Deposit Accounts

Fixed deposit accounts can provide security because you can lock in your money for a particular duration, ranging from 3 months to 5 years. The interest rates on fixed deposits are usually higher than the regular savings deposit accounts, and they may vary from 6% to 12% p.a., depending on the period and the bank.

Investment Accounts (Money Market Funds)

Banks and investment firms offer investment accounts, including money market funds. These accounts pool your money in a diversified portfolio of short-term securities, including T-bills and corporate bonds. The funds in the money market usually yield more than simple savings accounts, and their current rates hover between 8% and 15% p.a.

Related: 6 Best Banks in Kenya for Investments

4. Unit Trusts: Diversified and Professionally Managed

how to invest 100k in Kenya

Unit trusts are among the most common investment choices for those seeking exposure to multiple asset classes and professional management. Money from many investors accumulates in the fund, and then this fund invests in different kinds of assets, such as stocks, bonds, and money market securities. With these kinds of commitments, the advantages of diversification and professional management become apparent, which is essential when you need more investment knowledge.

Some popular unit trusts and collective investment schemes in Kenya include:

  • Equity Unit Trusts:These finances are mainly allocated to shares from listed stocks in the NSE and other regional markets. They allow investing in assets with the potential for price appreciation, but these investments are at higher risk.
  • Balanced Funds:Diversified funds create a mix of stocks, bonds, and other assets, assisting in balancing growth and income.
  • Money Market Funds:As mentioned earlier, the funds invested in such securities offer decent returns with reduced risk.

Some of the advantages of investing in unit trusts include:

  • Diversification: The amount you invest in a particular asset is divided into several assets, reducing the risk.
  • Professional Management: Unit trusts are handled by proficient managers who manage investments on your behalf based on their expertise.
  • Liquidity: You have an easy way out by claiming the units and accessing funds when you want.

Money market funds have the largest share of all funds in the investment schemes, with a whopping 65% in Kenya. As reported by Vasili Africa, the average annual return for credit money market unit trusts in Kenya was within 13.9% p.a in March 2024. However, past performance does not indicate the future; unit trusts enable one to invest in a well-managed portfolio that requires a low investment amount.

5. Stocks and Shares: High-Risk, High-Reward

how to invest 100k in Kenya

Diving into the stocks and shares listed on the NSE has proven a good option for those with a high-risk appetite who can wait for long-term returns. You can enjoy capital appreciation (the rise in share prices) and dividends through well-considered investments in organizations with good growth prospects and healthy financial status.

Compared to other ways of investing, the stock market comes with higher risks and the potential to gain higher returns through capital appreciation and dividends. Before any stocks are purchased, it is necessary to research, understand the company’s financial data, and obtain professional advice.

To buy shares at NSE, you must open a trading account with a stockbroker recognized for doing so. The NSE stocks being traded include big-cap companies such as Safaricom, Equity Bank, KCB Group, and EABL, which are well-established. Therefore, acquiring ETFs following different sectors or the NSE index, in general, enables diversification and minimization of the company risks.

The leading dividend payers in NSE in 2023 were KenGen (15%), Umeme (14%), and Stanchart (13%). While individual stocks offer the potential for higher returns, conducting due diligence and seeking professional advice is critical before investing in them.

Related: How to Invest In Stock Market in Kenya

6. Real Estate Investment Trusts (REITs)

how to invest 100k in Kenya

Real Estate Investment Trusts (REITs) are a trendy way of allocating capital by individuals since they allow them to make passive income from the rental income of real estate properties without owning them themselves. Since more than Ksh 100,000 may be needed to buy a significant piece of land. Therefore, REITs are ideal for investing in the real estate industry.

REITs in Kenya are regulated by the Capital Markets Authority (CMA). They can diversify the investor’s portfolios while enjoying the benefits of a stable market and the possibility of growth in the real estate sector.

Some of the advantages of investing in REITs include:

  • Diversification:REITs assemble a group of properties in a portfolio, allowing them to avoid the risk of investing in one property.
  • Liquidity:NSE stocks trade units of REIT, which means investors can buy and sell their units anytime they want.
  • Passive Income:REITs must pay out dividends to unitholders at least 80% of their taxable earnings.

To invest in REITs, you need to open a trading account with a well-established stockbroker who is licensed. The minimum investment amount depends on a specific REIT, which may vary.

Related: How to invest in REITs in Kenya

Free Investment Calculator

We suggest using our Savings and Investment Calculator to help you see the potential increase in your savings. Such a robust tool enables the input of the initial investment amount, the monthly contributions, the interest rate, and the investment duration for the final balance prediction, total contributions, and the total interest earned.

Let’s say, for example, you invest KSh 100,000 with a monthly contribution of KSh 5,000 with a 10% interest rate for ten years. You should have a final balance of KSh 1,142,961, and the interest earned will be KSh 442,961. This calculator enables you to research possibilities and make a well-informed decision.

Thus, regardless of your preferred investment option, strategy development is paramount, as is understanding the risks you are taking and seeking professional guidance when necessary. With these decisions being informed, you maintain your commitment to your investment goals and harness the power of Sh 100,000 to create a financially secure future.

Kick off your investing career right now by visiting our Savings and Investment Calculator webpage. Get started to bond with financial freedom and unleash the growth opportunities in Kenya’s dynamic investment arena now!

Final Thoughts

If you have KSh 100,000, this is an excellent opportunity to step into wealth creation. You can do this by considering the investment options offered in Kenya, carrying out comprehensive research, and using the Savings and Investment Calculator to make informed decisions and achieve the highest returns on your money.

Remember the most important considerations: diversification, patience, and discipline. These are the keys to successful investing. Start today by doing the first thing that takes you closer to a more secure financial future. Try out our Savings and Investment Calculator and be ready to invest confidently in your future.

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