What do I Invest in?

[BaMzee]

I have KES. 10,000 saved up in my bank account. I has taken me 5 months to get the 10K. I want to grow this money so that I can start a business later.

What do I invest the 10K in? Shares? Savings? .. what?

[franky]

hey,

i'd say 10 k is small money.but,that's what you have @ the moment. for shares to be profitable,you have to deal with big money. this helps you buy more shares and the taxation implications are minimal. throw the money in a bank account-yea acc if you are under 30 yrs. it has an intrest rate of 1.5%.keep increasing the funds and make sure that you never withdrw the acc below 5k.when you have a reasonable sum,buy shares.altanatively,you can participate in  an ipo-the upcoming coop bank ipo.

kind regards.

[Kay]

hey,

i'd say 10 k is small money.but,that's what you have @ the moment. for shares to be profitable,you have to deal with big money. this helps you buy more shares and the taxation implications are minimal. throw the money in a bank account-yea acc if you are under 30 yrs. it has an intrest rate of 1.5%.keep increasing the funds and make sure that you never withdrw the acc below 5k.when you have a reasonable sum,buy shares.altanatively,you can participate in  an ipo-the upcoming coop bank ipo.

kind regards.

10k isnt small money. Try having no money. I like your idea. I however have a different school of thot.
I think its better to start by putting it in the stock market. What you need is a plan, say you will have a plan to have ksh 100k invested in a particular stock in the NSE. Then u start with the 10k u now have,then every time you get some kash you just add up to the shares a/c until it fikas 100k. Plan accomplished.
Kay

[Fluorescent Adolescent]

1. Define "later"

2. You saved 10,000 in 5 months which translates to around 2,000 a month.

I make the following assumptions:

*You are  a student/ jobless/ lowly paid/ well paid but extravagant.
*You continue to save  2000 every month.
*You open the "YEA" account with CO-OP Bank.
*You (rather foolishly) proceed & continue to deposit your total savings in said account.
*Account "yields" an "attractive"  (fixed)  Interest rate of 1.5% p.a (as advertised)
*You withdraw the total amount after 12 months. (assuming multi period compounding of interest)

10,000*((1+(.015/12))^12 + 2,000*((((1+.015/12)^12)-1)/(.015/12))  =  34,316.725

Total Interest earned over 12 month period = 316.725 {34,316.725 - 34,000 }

You're probably thinking ...WTF? but wait...there's more...

Now less the expenses incurred in opening YEA  a/c (250.00)  and a one time withdrawal fee (25.00) at the end of a 12 month period.

316.725 - 250.00 - 25.00 = 41.725

Total Interest earned/ paid to you  on your  savings over a 12 month period = 41.725 Kshs. 


Effectively, your money has grown at 0.121397059%. Now compare that to last years annual inflation rate...


Now this right here is the interesting part.....

CO-OP being a bank, does what banks do and lends your money out:

*assuming 0 lead time and that money is lent out as soon as it is received
*money lent out at a constant/fixed  rate of  16%p.a (rate as of last week)
*money is returned to your account at the end of 12 month period

10,000 * ((1 + (.16 / 12))^12) + 2,000 * ((((1 + (.16 / 12))^12) - 1) / (.16 / 12)) =  37,562.927

Less amount paid into a/c (for purposes of this example, ignore banks own admin charges)
37,562.927 - 34,316.725 = 3,246.202

3,246.202/41.725 = 77.7999281

In English, the bank will use your money to gross 77 times the yield of your YEA account.
If you want to grow your money quick fast and in a hurry, do what I do. I am a student and yet, I make returns of 15 - 25% (better than market returns at the NSE) PER TRANSACTION!  (usually 4 weeks)

I rely on the GREED &  IGNORANCE  of my peers to do this.
That's right. I am a Shylock. 



** Disclosure: Holds STUDENT &  SAVINGS accounts at KCB, Barclays and the Royal Bank of Mattress**
E&OE

[Kay]

OMG !!!!
Those calculationas are deadly. U have a point with shylocking. Better make ur cash and re-invest it rather than help the bank collect from customers and give them crap while they make billions. I guess the only way they give back to clients is via CSR to the less fortunate. But how about to those who have helped them make this money!!!!!

Lakini, what security do u take while shylocking, log books ,\land ama the good old trust  
Kay

[justM]

hmmmm...

Flourecent

   1st. The enclosing brackets are excess on the first formula's, second section {where you multiply by 2000} syntax
           error
  2nd. You totally missed the point.... he asked for an investment.....and shylock is not termed as an investment
           ..its an occupation

...but you generally right bout the banks...I hate the fact that they claim to help us but out to make a kill with unknowing youth..DAMN ***es

BAmzee

  I'd rather you try something with a group {you could be chariman  } and you'lll get something out of it...
I have a group I go to...we now have shares worth 66k and bank balance of 53k...accum from late last year...

[Fluorescent Adolescent]

@Kay

Thanks for the compliment, but those calculations are actually quite standard  (justM appreciates the fact). It's when Stress Testing the loan portfolio where things get a bit thick 

I suppose you could buy your retail bank's shares (assuming they're publicly traded) and get a modest dividend cheque for your troubles.

I'll be explaining  my business model later, but I lend mostly to my fellow university students. No log books here.... but plenty of electronic gadgets to hold as security. For obvious and not so obvious reasons, the Mobile Phone is a prime candidate.

Mostly it's leeches your "friends" who would expect you to lend to them on the basis of "trust" (Wouldn't you know it?)  Lucky for me, I'm an Introvert.

@ justM

Dude, there's no need to be petty. If you weren't otherwise occupied nit-picking, and managed  to read my entire post, you would have noticed that:
1. I use parentheses a lot ( e.g. sentence 7, 8 (twice), 9 etc...)
2. It doesn't matter if there are 2 or 2000 extra pairs of brackets. If they're put in the RIGHT PLACES* they will yield the same result. Try copy pasting the calculations/formula above onto Google and then do it your way.... Hell you can even play around with the enclosing brackets all you like*. The answer will be the SAME & CORRECT... which is all that matters really.

At any rate, I am now so accustomed to the reverse Polish notation of my HP12C  that i don't care for brackets any more.

But you're right about usury being an occupation. I think what Bamzee is looking to do is grow his 10K(+/-) into enough capital to start a business. Personally, I believe the fastest way to do this would be my way. As an aside, I wonder how much your 66K has been affected by the prevailing bear market (?). And the opportunity cost of your "Idle" 53K(?)

All in all, I don't believe that joining a group is such a grand idea... off the top of my head I can think of:
* Exit Barriers
* Risk Thresholds ( in case your partners are pussy risk averse)

But I do stand to be corrected. Indeed, I want to be corrected. Perhaps you could start a new post detailing the formation, workings, highlights and exploits of your group. Should make for a most interesting read.

Let's get this money y'all.

[justM]

lol...

Actually noticed you in love wit parenthesis.....Hp12c but do you say...

Anyway, more interested in what ideas you could have because my friends are real risk takers (that is apart from shylockin...hell I said they risk takers not James Bond or Jack Bauer)

Supposing you given the 53k, OK lets say 30k, wat comes to mind first??

[menilio]

we make money, we rich!!! true dat shylocking is the biggest biz in kenyan campuses....wats wid all the fuss- that 10k is really good capital in this biz of shylokn' if yo a true gangsta or hustler if it be  BIG UP TO YO PEEPS.......I JUST LOVE THIS FORUM

[Fluorescent Adolescent]

.........And there goes the neighbourhood!

[Renee]

Hi, i'm recent graduate as recent as August. I got my first job and i'm been paid 15,000ksh. Its not much but i reckon i'm doing better than thousands who are struggling for even less. The thing is i'm not money savvy but i'm a fast learner and very good saver. I saved 6000ksh and invested in the retail business which doubled my money to 12,000ksh i want to continue growing it but i need an account where i can be transacting without hassle. I have a YEA account but i'm not to sure about that. I also have KENGEN shares worth 9000 that is like 1000 shares . I need to start a business but my time line is 5-10 years meanwhile i'm growing small.

[Fluorescent Adolescent]

Hey Renee,

1. I'm VERY interested in the nature of this retail business that you're engaged in. Especially the "double your money" part, and how much time that took. Care to share?

2. I don't know what your broker is telling you but KenGen's all time low in the last 12  months has been Kshs. 16.00. Never 9.00.  At close of business yesterday 06.10.08.  1,000 KenGen shares were worth Kshs. 19,950. (19.95 per share)

3. While I'll be the first to admit that I know little about bank accounts, I'd suggest you go with Equity Bank's Jijenge Account from a Cost of operations point of view

Pros
$  No ledger fees, maintenance fee and no monthly charges.
$  No cash deposit or cheque handling charges.
$  Free internal standing order.
$  Convenience of Mobile/SMS banking **, e-banking and VISA .
$  Extensive branch network, plus your account can be accessed at any branch.
$  Fast access to loans up to 90% of the Jijenge deposits at affordable interest rates (this will certainly help with the  expansion of your business).
$  Extensive ATM network which also accepts cash deposits saving on your bank hall processing time.
 
Cons
$ Perpetual queues at ATM on week after pay day.
$ Coincides with usually crowded bank halls.
$ A "contractual account"

http://www.equitybank.co.ke/personal_banking.php?subcat=38

[Kay]

Hi, i'm recent graduate as recent as August. I got my first job and i'm been paid 15,000ksh. Its not much but i reckon i'm doing better than thousands who are struggling for even less. The thing is i'm not money savvy but i'm a fast learner and very good saver. I saved 6000ksh and invested in the retail business which doubled my money to 12,000ksh i want to continue growing it but i need an account where i can be transacting without hassle. I have a YEA account but i'm not to sure about that. I also have KENGEN shares worth 9000 that is like 1000 shares . I need to start a business but my time line is 5-10 years meanwhile i'm growing small.

Renee,
I am actually very impressed by your savings culture. Plus you have a plan to put your money into different investment baskets (business, shares, cash). Also let us in on the biashara that doubled ur 6k. 
Below are my comments,

A bank account would be very good to put the cash. I usually go for banks that dont have long Q's like Bank of Africa. Reason being that I need to save on the time I'd need to spend on Q's...Time is worth alot. However since you are in retail business and you seem to be using the cash alot for biashara to transact, then you do not need to keep ur money in the bank if you can mpesa it to urself then withdraw it only when u need from a pesa point. Banks will just take away ur time while u Q. Embrase technology.

Remember to invest some of ur profits in other investment vehicles eg shares (like u have already started in Kgen). Kidogo kidogo hujaza kibaba. If you have given urself 10 years to grow ur business, then this is a good time to start investing in the stock market when the market is down. Forget the guys who sell in panic coz the market is going down, if u think on it clearly, anything that goes down will always go up after a point. Since u have 10 years, then this is the best time. One caution is that, u should do ur research as u invest so that you pick the favourable stocks. Its good to keep in close contact with a broker so that you are in the know. I always do that. If u like I can intro u to the broker I use.

Think big, if you are going to think anyway, you might as well think big!!!

Remember the power of gratitude. It will come back to you a hundred fold.

Be well.
Kay.