Starting to Invest

Hey there dear reader😊,

I hope you’ve had a blessed and joyful week! Welcome to today’s blog topic on investing in government bonds, specifically, M-akiba. Shout out to my friend Rachael for suggesting this particular topic😊.

One of the many questions my classmates and I will receive from our friends is how to start investing and make money. Giving an appealing and conclusive answer has proved to be difficult over time since we are also newbies in matters pertaining investments and a huge chunk of our investment knowledge is theoretical. However, after doing some extensive research, I hope to convince you to making an investment with m-akiba through today’s blog. I also got to convince myself to do so in the process.

To start with, let’s first understand M-akiba.

When the government wants money to finance its budgetary expenses, it will either use its own revenue or borrow money. However, we all know that our government has fared well in the latter, borrowing money from every mother’s son. The good thing is, to the government, when it makes the ‘lend to us’ outcry, many investors are willing to listen. Not only local investors, us Kenyans, but also foreign investors. Why is that, you may ask…

One of the major reasons investors will prefer lending to governments is because its considered a relatively safe investment as compared to other types of investments (e.g stocks). When a government comes to us, the public, to borrow money, there’s an assurance that we’ll definitely get our money back at the end of the lending period. This fact pleases investors since it means the risk of loss for your money is zero or non-existent. Government debt is what is also known as government bond.

M-akiba

The buzz for m-akiba started in 2015 when it was announced that all and sundry could now be able to lend to the government via the comfort of their mobile phones. Initially, there were only two ways to invest in government bonds; either through T-bills at a minimum of KES 100,000 investment or through T-bonds at a minimum of KES 50,000.

As you can tell, such an amount was and still is difficult to find and invest for most wananchi. So what the government did, through the task force of CBK and NSE, was to come up with m-akiba that allows you and I to lend to the government starting as low as KES 3,000. This lending is a form of “saving with the government” since you can regularly top up your m-akiba account when there’s a reopen or invest in the secondary market.

A great benefit of investing with m-akiba is that it offers a very attractive return of 10% per year. I stand corrected but from my little knowledge, saving with most banks offers you a return of about 7.5% as is with T-bills. So m-akiba “leads the pack”. And with this higher return, the 10% return is not taxable unlike earnings made from other investments. The 10% you get is “10% net”.

Aside from all these glaring benefits, how is the m-akiba money used?

Well, when it was launched, M-akiba funds were to be used to finance infrastructure projects. In fact, m-akiba bond is referred to as an infrastructure bond meaning the government will borrow from you (through m-akiba) for the sole purpose of developing infrastructure. So when investing with m-akiba, you can think of yourself as a financier to the roads being built (we hope so) across the country.

However, i know most of us find it difficult to invest even with the knowledge of these available investment opportunities. Most often that not, we don’t want to let go of that 1000 bob or 5000 bob or we think that 3000 is too little to invest/save, or the 10% return is “too small”. We want 100% return per annum (bro… kwa ground vitu ni different😂).

You don’t always go to battle with the army you want, but with the army you have. Building on a saving culture is rewarding. The start is always important and in my opinion, even starting from saving 100 or 500 is great. Chak achaka, just start. Furthermore, saving with m-akiba can be a good starting point as you know your money is safe and you are getting better interest compared to other viable investments.

You don’t always go to battle with the army you want, but with the army you have. Building on a saving culture is rewarding. The start is always important and in my opinion, even starting from saving 100 or 500 is great. Chak achaka, just start. Furthermore, saving with m-akiba can be a good starting point as you know your money is safe and you are getting better interest compared to other viable investments.

This is a conversation I really want to build on and learn. I had fun listening to views from people such as Caroline Mutoko and Rina Hicks, credible personalities.

I hope that somehow you’re motivated to start saving. Please feel free to share your thoughts on savings and investments and topics that you’ll like featured.

Thank you so much for reading through dear reader😊❤. Have a great weekend ahead.