IDEAL SAVING PLANS IN 2024,2025
Thinking of a steady financial savings plan in 2024?
We are here to walk with you in this journey towards financial literacy.
There are several ways in which we can maximise our savings interests and earn more while saving.These ways include;
1.Money market Funds.
2.SACCOs.
3.Treasury Bonds.
4.Banks Savings Accounts
5.Company shares
6.Investments.
1.Money Market Funds
WHAT IS A MMF?
A money market fund is a pooled investment where investors pool funds to invest in highly liquid,short term instruments.These instruments are overseen and managed by a fund manager.
Money market funds is part of the larger group of collective investment schemes that are managed by the Capital Markets Authority of Kenya.A trustee oversees the management of the fund and a custodian safeguards the assets and monies of the fund.
They pool money from investments such as;
-Treasury bills
-Treasury bonds
-Cash equivalent securities.
INTERESTS ON MONEY MARKET FUNDS(mmfs)
Most mmfs are offering returns above 13% beating inflation rate of 4.4%.
This offers higher returns than traditional savings accounts and provide better liquidity.
ADVANTAGES OF INVESTING IN A MONEY MARKET FUND(MMF)
1.Highly liquid.
You can access your money within 2-5 days.
2.Very low risk
You can hardly lose your money in a MMF .You never lose capital.MMFs are almost risk free.They invest in cash equivalents that have very low risk.
3.Little capital is required to get started.
Some MMFs require as little as KES 100 to get started.The average initial investment lies between KES 1,000-5,000.MMFs allow you to invest in areas such as Treasury bills and bonds that you would not otherwise invest as an individual.
4.Investment costs.
MMFs charge fees like management fees and withdrawal fees.Many funds may not openly disclose the fees they charge you,make sure to confirm.
MMFs that charge lower fees are the most ideal.
5.Ease of Access.
How easily can you access your money?On average,you can access your money within 2-5 working days.Some even allow access within 24 hours,while some even allow deposits and withdrawals via MPESA.
HOW TO JOIN AN MMF
Requirements.
-Be at least 18 years of age
-National Id or Passport
-Kra pin
-Bank account details
LIMITATIONS/CONS OF MMFS
There is only one!!!
-Not suitable for long-term investments like retirement planning because they do not offer much capital appreciation.
MMFs IN KENYA
1.Madison MMF
Initial investment amount of KES 5,000.No maximium limit
Current annual yield of 9.62% p.a
2.Cytonn MMF
Annual management fee at1.5% p.a.
Minimium investment of KES 100.Allows deposit via Mpesa.
3.Zimele MMF
Minimium deposit of KES 100.Mpesa options for deposit and withdrawal.
Management fee of 2% p.a.
4.CIC MMF
Minimium investment of KES 5,000.Minimium additional amount is KES 1000.
Monthly statements provided.
5.ICEA LION MMF
Minimium investment is KES 500.
You can make additional deposits of any amount at any time.
6.Sanlam MMF
Zero initial fees.Minimium investment is KES 2500.
Annual management fee of 1.2% p.a
2.SACCOs
- WHAT YOU NEED TO KNOW ABOUT SACCOs
In a SACCO,most people benefit from access to better credit terms as compared to banks and other financial institutions.
Hence,the best SACCO to join is one where you can easily get guarantors whenever you need a loan.Most preferably,where your friends,relatives or work colleagues are members.
Which is the best SACCO to join?
WHAT ARE THE COSIDERATIONS TO MAKE WHEN JOINING A SACCO
1.Financial Stability of the SACCO
According to Sacco Societies & Regulatory Authority (SASRA),all Deposit Taking (DT) Saccos should:
a)Have a core capital to Total Assets ratio of at least 10%
b)Core capital to Total deposits should be more than 8%
c)The maximium external borrowing to total assets allowed is 8%
2.Access to guarantors
Saccos need guarantors details and signatories for it to approve a loan.
3.Interest rate on loans,savings and dividends on share capital.
SACCOs have different loan facilities.Hence,one would want a SACCO that has favorable rates on both loans and your savings.
4.Loan size vs savings
Most SACCOs allow members to borrow 3 times their savings.However,there are saccos that allow members to borrow 4 or 5 times their savings.
BEST 10 SACCOS IN KENYA,2024
1.STIMA SACCO
Known for its strong performance in dividends and stable growth,particularly among employees in the energy sector.
2.KENYA POLICE SACCO
One of the largest and most stable SACCOs,offering excellent returns to members.
3.HARAMBEE SACCO
Primarily serving government employees,it’s known for its stability and competitive interest rates on savings.
4.MWALIMU NATIONAL SACCO
A top choice for teachers,offering attractive investment opportunities with good returns.
5.UNAITAS SACCO
Open to the public and expanding rapidly,with diverse financial products and consistent dividend payouts.
6.IMARISHA SACCO
It’s getting predominant in the Rift Valley,with most of their clients being government employees,mostly teachers.
7.AFYA SACCO
Mostly used by the medical employees.
REQUIREMENTS NEEDED TO JOIN A SACCO
-National ID
-KRA Pin
-Passport size photograph
-Current pay slip/bank statement for loans
POINT TO NOTE;If you can identify a stable SACCO and build your share capital upto KES 300k,you could earn KES 45 K annually at 15% dividend rate and recoup capital in 7 years.
3.TREASURY BONDS
WHAT ARE TREASURY BONDS?
These are investments,in which an investor invests in the Kenyan Government.They are in a way,units of government debt.You are giving the government money to be returned with some interests.
Treasury bonds are medium,long term investments .Investors mainly make money from the semi annual interest payments knowns as coupons that are paid out twice a year.
When bought at a discount(required yield higher than coupon),the investor benefits from the discount(capital gain) which is critical for secondary market trading.
Maturities of Treasury Bonds ranges from 1-30 years.
HOW TO GET STARTED INVESTING IN TREASURY BONDS
The most ideal way is through CBK.
Open an CSD account with CBK via the DhowCSD platform,either through their app or portal.
Available on the CBK website.
WHAT IS THE MINIMIUM INVESTMENT ON TREASURY BONDS?
The minimal capital requirement is KES 50,000.However,for most infrastructure bonds,the minimium capital is KES 100,000.
Treasury bonds can be traded in the secondary market.Therefore,can be liquidated before maturity dates,that is,the investor can sell them in the secondary market via a stock broker.
HOW OFTEN ARE THE BONDS ISSUED BY THE CBK
Treasury bonds are auctioned monthly.They are Tax free.
TREASURY BILLS
Most people can’t differentiate between treasury bonds and treasury bills.
A Treasury bill is a short term borrowing instrument issued by the CBK to raise money on a short term basis,for a period of upto 1 year.
Treasury bills are issued in maturities of 91,182 and 364 days.
They are sold at a discounted price to reflect investors’ return and redeemed at face value.
The minimium capital requirement is KES 100,000.
4.BANK SAVINGS ACCOUNTS
There are hundreds of banks across the country.Each and every bank has a savings account option.
While these savings plans may not have have good interest rates,most people are in fact using it due to lack of a better option.
BEST BANKS TO OPEN A SAVINGS ACCOUNT
1.KCB BANK
KCB Bank has 3 saving account options
-Target savings account
-Fixed savings account
-Goal savings account
2.Cooperative bank
3.Stanbic bank
4.Absa bank
4.Family bank
5.Equity bank.
Bank savings accounts has been termed as a traditional way of saving money,hence most people have outgrown this idea.