Kenyan Expert Shares 4 Investment Options for Low-Income Earners: "Not for Everyone"
Benjamin Cheruiyot, an investment advisor at Abojani, shared four wealth-building tips for low-income earners
Cheruiyot emphasised the importance of discipline, noting that building wealth requires sacrifices often misunderstood by family and friends
Money market funds (MMFs) were highlighted as ideal for emergency or sinking funds, with investments starting as low as KSh 100 while stocks are ideal for long-term investments
Elijah Ntongai, a journalist at TUKO.co.ke, has more than three years of financial, business, and technology research and reporting expertise, providing insights into Kenyan and global trends.
Benjamin Cheruiyot, a leading investment advisor at Abojani, has shared practical tips for low-income earners looking to build wealth.
Picture of a man holding bills and a wealth-building concept used for illustration purposes. Photo: Getty Images.
Source: UGC
Cheruiyot stated that one would need to invest about KSh 10,000 per month at a 13% annual return to build an investment portfolio worth KSh 1 million in six years.
He further noted that this is not easy, and one would need to make sacrifices, which may be misunderstood by family and friends during this process due to the discipline that is required to build wealth.
"Your family and friends may not understand your mission, vision, sacrifices, and goals. Building wealth isn?t for everyone; never has been, never will be," Cheruiyot said on X.
Investment options for Kenyans
Speaking exclusively to TUKO.co.ke, Cheruiyot laid out four key investment options tailored to individuals with limited disposable income.
1. Money market funds (MMFs)
Cheruiyot highlighted money market funds as an ideal starting point for those looking to establish an emergency or sinking fund and noted that this option is accessible with some MMFs allowing as low as KSh 100.
"MMF is highly recommended for an emergency fund or a sinking fund where you target an expense like accumulating school fees a few months away, or saving for vacation in Zanzibar in December 2025. The beauty of MMF is that while you save, you enjoy daily or monthly interest credits, and you can access it any time,? Cheruiyot explained.
2. SACCO deposits
According to Cheruiyot, individuals can start saving with amounts as low as Sh 2,000 per month and earn an interest rate at an average of 9% per year.'
He explained that saving KSh 5,000 monthly can accumulate to KSh 60,000 in a year, which could yield an additional KSh 5,000 in interest after taxes and in return provide access to loans three or four times the amount saved.
3. Bond funds
Bond funds are another lucrative option for low-income earners seeking steady returns with minimal volatility. Cheruiyot stated that leading insurance companies and investment banks allow investments with as low as KSh 1,000 and earn annual interest rates of over 13%.
?Bond funds provide a stable way to grow wealth over time without the fluctuations associated with some other forms of investment,? Cheruiyot noted.
4. Dividend stocks
Investing in quality dividend stocks is a long-term strategy for creating passive income through dividends. According to Cheruiyot, with a minimum of KSh 2,000 monthly, investors can buy 100 shares regularly and accumulate a significant portfolio over time.
For example, purchasing Co-op Bank shares for a year could cost less than Sh 20,000 (including brokerage fees) and yield dividends of about Sh 1,800, assuming the bank retains its Sh 1.50 per share dividend.
"You can invest less than KSh 2,000 monthly if targeting quality dividend stocks like ABSA and Co-op banks. With these trading at KSh 17 and KSh 15, respectively, you can buy a minimum of 100 shares of either every month, or whenever you have spare cash. In a year, you will have 1200 shares at less than KSh 20,000 for Co-op (inclusive of brokerage commissions); assuming the share price doesn't change much. This will earn you KSh 1,800 dividend assuming Co-op retains KSh 1.50 dividend)," Cheruiyot told TUKO.co.ke.
To invest in dividend stocks, Cheruiyot advised setting up an active Central Depository System (CDS) account with a Nairobi Securities Exchange-licensed broker.
Best-performing stocks in Kenya
Earlier, TUKO.co.ke analysed the 15 best-performing stocks on the Nairobi Securities Exchange in 2024.
The top-performing stock, East African Portland Cement, gained over 312% in the past year, followed by Kenya Power, which gained 192%.
Other strong performers include KCB Group, I&M Holdings, and Liberty Kenya Holdings, with significant price gains in 2024.
Source: TUKO.co.ke
