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How Sh45k salary can make you a dollar millionaire

 Rina Karina of Faida Investment Bank [Photo: Courtesy]

What should you ask your fiancée before marriage? Why do young people grow into broke adults? How can one become a millionaire with a salary of only Sh45, 000? Caroline Njoroge spoke to financial consultant Rina Karina of Faida Investment Bank

Can someone with a modest job become rich without being corrupt?

What you earn is irrelevant as long as you manage your money well over a long period of time. If you have a goal, it will drive you to look for other sources of income. Just be consistent and manage your money wisely.

Start saving early, no matter how little, even as early as 19 years. Don’t wait until you are 40 to start putting something away for the future.

Saving as little as Sh2, 000 per month for 20 years can make you a multi-millionaire if you are earning compounded interest at the rate of 10 per cent per year.

But how does one grow their money when they have so little of it?

With as little as Sh1, 000, one can invest in the stock market. There are so many avenues to make your money grow; such as Saccos, money market funds, treasury bills, forex and so on. One can also start rearing chicken and selling them for a small margin.

I know of someone who started a tours and travel business with just Sh2, 000 and the business has grown to become valued at millions of shillings.

I have a friend who has never earned more than Sh45, 000 as salary, and yet she is worth more than Sh100 million today because of investing in real estate.

She started by buying some pieces of land in installments of what she could afford to set aside every month, and then selling them off and making some money out of it.   

 What would you say to a young, newly married couple who want to invest for the future?

It’s great to have such plans at that age. The most important starting point is to discuss what quality of life they want to live beyond buying houses and cars.

The biggest mistake we make when we are younger is to look around and base our lives on the possessions or lifestyles of other people. That is why there are many people living a façade; unsustainable lives that are built on debt.

Let your definition of a “good quality life” go beyond what you see in others in terms of material wealth. What do you want for the next one year? What kind of education do you want for your children? Don’t build your goals based on other people’s achievements.

 Research has shown that fights over money lead to higher number of divorces than infidelity.  What conversation should couple have about money before marriage?

Honestly, there is no conversation that will guarantee that you won’t fight over money! However, what is your spouse’s money personality? Are they spenders or hoarders by nature? Are there family members that your spouse is supporting? How many? These questions will help you determine if you are willing to live with the financial implications of what it means to marry that person.

 How can stay-at-home mums invest?

There is a lady who called me recently after watching one of my YouTube videos and asked me what she can do with the little she has access to. So I asked her how much she can get in a month, and she said, “Well if I work really, really hard, I can get Sh6, 000 in a month.”

 My response was, ‘that is a lot of money!’ So I told her to start by investing in a money market fund and to call me back once that money gets to Sh60, 000.

She called me back in less than three months! A stay at home mum has been able to invest by saving what she gets from her husband and devising ways of cutting on expenditure so that she can save more.

 What are some of the common mistakes young people make when it comes to money?

Most young people think that all they need is just that “one big deal” to sort them out for the rest of their lives.

They look for opportunities that will guarantee huge returns within a short period of time, you know, that deal that will bring in 30 per cent per month in returns: like, can I supply tomatoes to this big company, which big tender can I land? and so on. The challenge is there is no calculation done of the risk involved.

 But isn’t businesses about taking risks?

Risk must be calculated! Let us say you’ve gotten a tender that needs you to supply a tonne of goods, and since you don’t have the money, you borrow from a shylock to ensure you make your delivery.

The company you are supplying to however starts giving you the run around and all the calculations you had done in your head come crumbling down as the shylock comes demanding for his money.

 You end up in so much more trouble than you had anticipated. There is a risk element and a return element involved in every investment and one must weigh both in order to make a wise decision. Young people tend to ignore the risk element in opportunities and focus only on the prospective returns promised.

 What is the greatest mistake you have made with your personal finances?

I once took out all the money I had saved, sold my old car (the only one I had) in order to raise Sh500, 000 that a friend had requested I lend him to invest. The returns he promised were great (20 per cent per month), plus I would have my money before the end of one year. To date, he’s paid me back just Sh20, 000 from that sum. It was a choice made out of greed and lived to tell the story. I learnt from that day that before I lend anyone money, I must do my calculations thoroughly. If it is for an investment venture, then I have to scrutinize it thoroughly before I agree.

 What is your advice to that person who feels like they are too old for this or that it’s too late for them?

It’s never too late to start investing. Change begins with a decision. Decide that from today, you are going to start making choices that set you on a different path. Start investing whatever you have today.


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