If you have been saving consistently and have hit 100k in your savings account, or you just got gifted 100k, you may want to know the safest and most profitable ways to make that money work for you. But, where do you start?
While “investing” may sound like something reserved for the guys in suits, the truth is, you can do it too, and anyone can! But with so many investment options and business ideas, where do you start?
This guide will explore some of the best ways to invest 100k in Kenya. We will look at different options, weigh the potential returns, and consider the risks involved.
What Investment Has the Highest Return in Kenya?
In the current economy, the investment landscape is diverse, with different sectors offering varying levels of return.
Historically, real estate, especially in rapidly growing urban areas, has provided some of the highest returns. Land prices in areas around Nairobi and other major towns have seen substantial appreciation, making real estate a lucrative option for those looking for long-term gains. However, the initial capital required often exceeds 100k, which can be a limiting factor.
Another high-return investment avenue is the stock market. Investing in shares of well-established companies listed on the Nairobi Securities Exchange (NSE) like Safaricom, Britam, and Equity can yield significant returns, especially if you pick the right stocks at the right time.
Where to Invest 100k in Kenya
There are several viable options for investing 100k in Kenya, each with its own set of benefits and risks. Here are some of the most promising ones:
Money Market Funds (MMFs)
Money Market Funds are an excellent starting point for new investors.
With as little as 100k, you can invest in a diversified portfolio of low-risk securities. MMFs are managed by professionals, making them a hands-off investment.
The expected return is typically between 8% to 10% annually. While the returns are modest compared to high-risk investments, the risk of losing your principal is minimal.
Government Bonds
Government bonds are a safe and steady investment. With 100k, you can purchase a government bond, which pays a fixed interest rate over a specified period. The returns on bonds are usually around 10% to 12% per year.
The advantage of investing in government bonds is the security of the investment, as it is backed by the government. However, the downside is the relatively lower liquidity, as you may need to hold the bond to maturity to avoid penalties.
Unit Trusts
Unit trusts pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities.
With 100k, you can access professionally managed unit trusts that provide growth and income. The expected returns can vary widely depending on the type of unit trust, ranging from 7% to 15% annually.
The risk level also varies, so it’s important to choose a unit trust that aligns with your risk tolerance.
Agribusiness
With 100k, you can start a small-scale farming venture, such as poultry farming, dairy farming, bee-keeping, or even pig farming.
For instance, you could start a poultry farm with about 100 chicks, with an expected return of 20% to 30% annually if managed well. The risks include disease outbreaks and market fluctuations, but the potential earnings can be substantial.
Chama
Joining a chama can be a great way to invest 100k. Chamas are savings and investment groups where members pool their money to invest in various ventures, such as real estate, small businesses, or even the stock market.
The returns vary depending on the investments the group chooses, but being part of a chama offers the advantage of collective decision-making and reduced individual risk.
Does MMF Pay Monthly?
Yes, most Money Market Funds (MMFs) in Kenya do pay out earnings on a monthly basis. The returns are usually in the form of interest, which is credited to your account at the end of each month.
The amount you earn depends on the performance of the fund and the prevailing interest rates in the market. While the returns may seem modest compared to more aggressive investments, the consistency of monthly payouts can be appealing for investors looking for a monthly income.
What Business to Start with 100K in Kenya?
There are numerous profitable businesses you can start with 100k, but your choice depends on your interests and market demand. For example, you could start a small food kiosk or mobile food cart, selling snacks and beverages in busy areas. The startup cost would cover equipment, initial stock, and permits. If well-located, this business could generate daily income with a relatively quick return on investment.
Another option is starting a small boutique or second-hand clothing business. With 100k, you can purchase a good amount of inventory and set up shop in a busy market or even online.
You can also tap into the growing e-commerce market in Kenya by starting an online shop. You can find fast-moving profitable products that have a high market and start marketing them through Facebook, Instagram, WhatsApp, or even online marketplaces like Jiji and Pigiame.
If you’re tech-savvy, starting a freelance digital services business, such as graphic design, content writing, or social media management, requires minimal initial capital. The 100k could be invested in marketing, equipment, and training, allowing you to offer your services to local and international clients.
Where Can I Invest 100k and Get Monthly Income in Kenya?
If your goal is to invest 100k and receive monthly income, there are a few options to consider.
Money Market Funds (MMFs)
As mentioned earlier, MMFs provide monthly payouts, making them an excellent option for regular income. They are low-risk and relatively stable, ensuring that your principal remains secure while you earn consistent returns.
Real Estate Rentals
While 100k might not be enough to purchase a property outright, you could consider investing in a partnership or a real estate investment trust (REIT). This allows you to earn rental income from shared properties, with earnings distributed monthly or quarterly.
Peer-to-Peer Lending
Platforms like Pezesha allow you to lend money to individuals or small businesses in exchange for monthly interest payments. With 100k, you can diversify your loans to reduce risk while enjoying monthly returns. However, this option carries a higher risk due to the potential for defaults.
Which is the Best Sacco to Invest in Kenya?
Savings and Credit Cooperative Organizations (SACCOs) are popular investment vehicles in Kenya, offering both security and competitive returns. Some of the best SACCOs to consider include:
Stima SACCO
Known for its high dividends and stability, Stima SACCO is popular among professionals, particularly in the energy sector. It offers a range of investment products, including fixed deposits and loans.
Mwalimu SACCO
Primarily for teachers and education sector employees, Mwalimu SACCO has consistently provided strong returns on savings and has a reputation for excellent member services.
Harambee SACCO
Open to public servants and government employees, Harambee SACCO offers competitive returns and a wide range of investment options, making it a solid choice for long-term investors.
Unaitas SACCO
Known for its wide network, Unaitas SACCO welcomes members from all sectors and offers a variety of savings and investment products with attractive returns.
These saccos are among the most reputable and reliable in the country, but there are 100+ others that excel in different towns and sectors in Kenya.
Conclusion
Investing 100k in Kenya offers a range of opportunities, from low-risk options like Money Market Funds to more hands-on ventures like starting a small business.
The key to success lies in understanding your financial goals, risk tolerance, and the time frame for your investment. By carefully considering the options available, you can make informed decisions that will help grow your wealth and secure your financial future.