Beyond the Piggy Bank: Clever Tactics for Savvy Savings and Earnings

• There are many methods to help your money grow instead of letting it sit idly in a savings account or a household piggy bank.
• The financial consultant Walter Tarus pointed out that saving and investing funds has the potential to increase wealth via dividends, interest, or capital gains.
• Tarus mentioned that through savings and earning dividends, individuals could reach their financial goals, accumulate wealth gradually, and enhance their fiscal security.

The .co.ke correspondent Japhet Ruto possesses more than eight years of expertise in covering finance, commerce, and technological subjects. His work provides profound perspectives on both Kenya’s and international economic patterns.

Several methods can be employed to boost your finances rather than leaving them stagnant in a bank account or a savings jar at home.

Why invest your money?

Financial advisor Walter Tarus pointed out that saving and investing money has the potential to increase substantially via dividends, interest, or capital gains.

Tarus pointed out that by setting aside funds and earning dividends, individuals could reach their monetary goals, accumulate wealth gradually, and enhance their fiscal security.

"Several investment paths are worth exploring. You could seek advice from a financial consultant or perform comprehensive research to discover investment possibilities aligned with your risk appetite and fiscal goals. These alternatives include SACCOs, government instruments like Treasury Bills and Treasury Bonds, along with money market funds," explained Tarus during an exclusive talk with .co.ke.

Ways to invest money

1. Saccos

SACCOs are great for earning dividends and saving money.

Unlike conventional banks, they typically provide more generous interest rates on savings accounts and often share profits with their members through dividends, reflecting the financial success of the Sacco.

In the fiscal year concluding in December 2023, Tower Sacco, attracting both government and privately employed individuals who contribute at least KSh 500 per month, distributed dividends as high as 20%.

Other institutions such as Hazina and Stima Sacco, which require a minimum monthly contribution of KSh 1,000, distributed returns of 17% and 15%, respectively.

2. Money market funds

Tarus disclosed that money market funds (MMFs) provide interest rates approximately 10-12% per year above those offered by conventional bank savings accounts.

Money Market Funds provide the flexibility to enroll and withdraw funds whenever needed. These funds can be appropriate for both short-term and long-term investment strategies.

Tarus mentioned that this investment allows you to harness the strength of compound interest, as the monthly earnings are automatically added back into your original principal.

3. Treasury Bonds

As stated by the Central Bank of Kenya (CBK), Treasury Bonds represent medium- to long-term investment options that offer interest payments twice annually until their maturity date.

The regulatory body for banks conducts monthly auctions of Treasury bonds at a set interest rate, yet provides an array of bond options across different times within the year.

Sometimes, the National Treasury also provides tax-free infrastructure bonds.

4. Treasury Bills

Treasury bills provide coupon rates of 16.72%, 16.87%, and 16.98% for the 91-day, 182-day, and 364-day periods, respectively.

These items are sold every week and can be reached via the CBK's Dhow Portal.

The Central Bank of Kenya (CBK) explained that treasury bills are offered at a discount. This indicates that investors select the sum they wish to receive upon maturity of the bill, which represents the face value, and pay an amount below this figure when buying it.

5. Company shares

By holding company stocks, individuals receive annual dividend payments and can realize capital gains upon selling their shares.

In order to purchase or trade shares, individuals are required to establish a Central Depository System (CDS) account with companies that are listed on the Nairobi Securities Exchange (NSE).

As stated by the Kenya Association of Stockbrokers and Investment Banks (KASIB), the CDS has enhanced market efficiency and lowered transaction costs.

Methods for earning income on the internet

Other stories include various methods for earning income via the internet such as academic writing, freelance work, and producing content.

According to a survey conducted by the Kenya Private Sector Alliance (KEPSA), approximately 1.2 million people, which constitutes five percent of the population in Kenya, engage in online work.

The research indicated that individuals who work online receive an average of KSh 20,773, highlighting the significance of the digital economy.