4th Apr, 2016
Think of two individuals – Peter and Lucile – each pursuing a different kind of investment. While Peter invests in real estate, Lucile saves her money in a local bank and chamas.
Both plans are worthwhile investments. According to Paul Nyaga, the Head of Brokerage at KCB Capital Limited, there is nothing like a bad investment.
“It all depends on the objective and, very importantly, the partner that one ropes in to support their investments,” Mr Nyaga argues.
More Kenyans are now keen on saving and like Peter and Lucile, they put away part of their salaries in savings and investments that will help their money grow.
Nyaga briefly defines investment as deferred present consumption for higher future consumption. He says that an investor could purchase as part of their investment land, capital or invest in money market securities.
The Kenyan investment space is mostly dominated by institutional investors, he says. “Retail investors’ participation in the local bourse (NSE) has been declining, but the opportunities for attractive returns still remain for those who are willing to weather the shocks associated with a free market” Nyaga adds.
Back to our two friends Lucile and Peter. Lucile has been saving money in a bank since she was a student. To date, she saves about Sh 10,000 in chamas monthly and Sh 30,000 in a bank whereas Mburu puts in Sh 40,000 in his real estate projects. Each has been saving for about three years.
Both are in agreement that it is not always easy to set aside the money but with discipline and commitment, they have been able to keep at it despite the daily personal and family demands.
Lucile, through her effort has been able to furnish her house through the chamas while Peter now has an extra source of income from his projects.
KCB Bank offers various other investment options, Paul is quick to add. The bank, he says provides custody services for Capital and Money Market investment securities such as Fixed Deposits, Treasury Bills, Treasury Bonds, Corporate Bonds, Commercial Papers, Real Estate Investment Trusts (REITs) and Equities.
The custody services include safekeeping of the customer’s investments, processing investment transactions and the related entitlements, and implementing a customer’s instructions to purchase or sale of investments, in the local, regional or offshore markets.
In addition, the bank also provides reports to account for the customer’s investment portfolio on a regular basis.
For new investors, Paul explains that they may find different investment products that will suit them differently depending on their investor risk profile/ appetite.
Every investor, he asserts, should ensure that they have put in place adequate measures to protect and safeguard their investments.
“Begin by appointing a custodian who will be responsible for the safekeeping of your assets, and will competently carry out any transactions related to those investments,” the KCB expert advices.
He urges interested investors to set their vision on KCB as they are a step ahead of other players in the same field. He offers this advice, “The key difference with other investment industry players is that a custodian does not offer investment advisory services. Appointing a custodian to manage your investment assets also provides checks and balances between an investor’s service providers (Stock Brokers and Investment Managers) and creates transparency in transactions, thereby reducing risk and ensuring an investors assets are fully safeguarded.”
In the near future, he adds, we anticipate that trading and settlement will happen on the same day as most securities are now listed, traded and settled in electronic form.
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